Saving is the path to investment

Saving is considered the first and most important commandment that our parents guide us to, as if there is an implicit agreement on that, in addition to the popular proverbs that call on us to save the white shark for the black day. Two people may not disagree on the importance of saving, as if saving is the main goal, but you may be surprised that saving What they mean is the beginning of the journey, not the end. In this article, dear reader, we will talk about saving as it should be.

What is saving?

Saving means allocating a portion of income to be used in the future rather than in the present, and is often saved in the form of cash at home, in a bank account, or saved by purchasing gold. The process of saving involves the belief that postponing the use of money from the present to the future will bring greater benefits. Accumulating savings will give us enough space to achieve goals that require larger amounts, such as expanding work or even traveling and entering into new adventures.

Saving is divided into planned saving and unplanned saving. In planned saving, a specific percentage of income is set aside each month for the purpose of saving, and this is the correct method of saving. As for unplanned saving, the individual sets aside the remainder of the income at the end of the month after consumption. If there is nothing left, no savings are made that month.

Here someone might say: How can I save when my income is not enough for me? Here we must stand honestly with ourselves and ask: Is our financial behavior as it should be or are there some mistakes? If your income is not truly enough for the basics of life, you must look for an additional source of income. We must be aware, dear reader, that our spending must be less than our income in all cases. We must adapt to our income. It is not acceptable for my income to be seven thousand riyals and my spending to be nine thousand riyals! This is what has been passed down through the generations in popular proverbs, which supports this: “Stretch your feet over your quilt.”

Why save?

The abundance of money may tempt us and push us to be lenient in saving, considering that we do not need it. This may be the case at the present time, but we do not guarantee the coming days. Saving gives us security from future fluctuations, whether financial or family.

We often save to cover the following aspects:

1. Saving for emergencies: No one is safe from the fluctuations of daily life. Your income may be good at covering your usual daily obligations, but how will you act if you have an unplanned financial obligation? How will you act if your house is exposed to a fire, God forbid?, or you bear medical expenses. Expensive? Suddenly lost your job? This part of the savings is intended to cover sudden life circumstances. The emergency savings fund should cover the necessary expenses for three to six months. It is never correct to use it in cases other than those specified. Here we must emphasize that we do not think poorly of God. On the contrary, we place our trust in God as He deserves by adopting the reasons.
2. Saving to cover short-term goals: In this aspect of saving, we start saving and have a goal in front of us that we want to reach, such as buying a car, paying a university tuition, traveling on vacation, or even to fulfill outstanding debts and obligations. And other goals that begin and end within a relatively short time.
3. Long-term saving: Money is set aside for long periods extending to more than five years, with the aim of improving the quality of life for the post-retirement period, or covering obligations that are expected to arise after this period, such as traveling to complete graduate studies, or starting a special project.

Savings and diminishing value

It may be expected that saving is saving money from consumption, but in doing so we ignore some aspects. It is true that the amount saved does not change in terms of the number of banknotes, but the value of the money is subject to continuous decline. What you used to buy for twenty riyals a few years ago, you now buy for thirty riyals. !.

On the other hand, we must pay zakat on the saved money every year, and this is another reason for the decrease in the saved amount. Therefore, we do not guarantee that the value of the saved money will be maintained, but rather we are certain that it decreases with the passage of time.

Saving is your way to invest

You may be surprised, dear reader, that saving is not a goal in itself, but rather a path that must be crossed in order to reach investment. We save first and then invest. Investment means using money to purchase assets that are expected to generate income or profit in the future. Therefore, investment will compensate us for the decrease in... The value of money, whether this is a result of the decrease in the value of money (inflation), or the performance of the obligation of zakat, and we see this in the guidance of Omar bin Al-Khattab, may he be pleased with him, when he said: “Deal in the money of orphans, so that zakat will not consume it.”

When do I start investing?

Before starting to invest, you must answer the following:

-Do you suffer from debt?

If you are suffering from debt, you may wonder: Should I start repaying the debts or should I start investing? In order to be able to answer, we must determine whether these debts are good loans without interest, or are they debts with interest.

You can agree with the lender to pay the debt in monthly installments, and on the other hand, you can start allocating an amount of money for savings, even if it is small.

If you borrow from more than one party, start arranging the debts from the most expensive, especially credit card debts, to the least expensive debts. This will give you more enthusiasm to continue the repayment process.

-Do you have an emergency savings fund?

As we mentioned previously, the Emergency Savings Fund represents security from exceptional circumstances in our daily lives. On the other hand, it guarantees us that we will not resort to taking from investment funds. Having easily accessible money in exceptional circumstances will not force me to sell investment assets to cover them. Therefore, the Emergency Savings Fund protects From sudden circumstances, it also protects the investment and maintains its returns.

If you are free of debt and have an emergency savings fund, you are now ready to start your investment journey. Remember that investing is not limited to the affluent, but rather a necessity for everyone.