Financial Gentleman
By Bobby Bhuiyan
The benefit of having reliable income from
steady employment or even
self-employment allows us to save for goals
and aspirations now and in the future using
our disposable income. To calculate your
disposable income you should work out
your out-goings and whatever is left you
should allocate to your savings, I would
recommend opening multiple bank
accounts and allocating budgets to each area
thus ensuring your on track for all goals and
targets.
As such we have three main savings goals
with respect to time periods; Short term,
Medium term and Long term savings
options.
In this section I want to talk about your
short term savings, ideally you should keep
your savings in this area fairly liquid and
accessible in the event you need access for
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emergencies, hence this is in the short term
category. As this is accessible very easily in
most cases the growth will be low and not
keep up with inflation. Most banks and
financial institutions will offer various
deposit based interest, depending on the
restrictions for access to your short term
savings, the longer you can afford to lock in
the offer the better the offered rate of
interest.
Now there are various options available the
best options allow you to earn interest on
your interest, this is technically called
compounding interest, ideally kept in the
same account.
With compound interest, your savings have
the chance to grow at a faster rate than
standard interest options when interest is
simply paid flat. When you earn interest on
your savings, the interest you earn is added
to your savings pot.