Understanding, Valuing, and Enjoying Life Savings
~ Saturday, September 23, 2023 Blog Post ~
People typically hear the term “life savings” when someone they know remark that they spent their life savings on a brand-new car or buying their own house. Some also share that they got defrauded out of their life savings.
So, what is “life savings”? And what makes it important?
In this blog post, I included pictures of myself accompanying my Dad for coffee after lunch at the Makati Shangri-La Hotel’s Lobby Lounge. It is where I wrote this new personal finance article.
The Makati Shangri-La Hotel is a five-star, multi-use property. It re-opened to the public last August after shutting down for about two years due to the COVID-19 pandemic. As a Shangri-La Circle member and hotel staycation aficionado, I relish the perks offered by the Makati branch of the Shangri-La hospitality firm.
a) Definition of Life Savings
Life savings pertains to the sum of all the money or financial assets a person has. This money can be stacks of cold, hard cash, or the funds in one’s cryptocurrency wallet, bank account, or investment account.
b) Purpose of Life Savings
Based on the 2019 data by the Federal Reserve’s Survey of Consumer Finances, an American family has average assets worth US$227,500. Life savings has many purposes.
People typically utilize it for the important moments in their lives. Moreover, life savings are intended for the achievement of a person’s financial goals, which are financial life planning’s bedrock.
People usually write down or list their financial goals which are targets that define how much money they need. These personal plans are achievable using one’s life savings.
Examples of financial goals are:
1. New car / Car ownership
2. Home ownership
3. Vacation / Long-term travel
4. Wedding / Marriage and starting one’s own family
5. Charity
6. Education / College / Higher Education
7. Home renovation
8. Starting a business
9. Retirement
10. Long-term care
11. Financial freedom
12. Career shift
13. Independent living / Moving out of home
14. Relocating
15. Major insurance plan
16. Providing financial support for elderly parents or other relatives
17. Purchasing other property
People can reach these financial goals faster if they invest their life savings wisely. Investing helps one’s hard-earned money grow quickly.
c) 2 Methods of Building One’s Life Savings
Everyone can build their life savings, regardless of their personal economics or income status. Building one’s life savings is based on how a person can afford funding this amount of money and when he is finally prepared to begin building it.
There are two ways to grow one’s life savings:
a. Time-bound and goal-specific
This technique of building one’s life savings involves a person tying a major personal or life goal with his target savings amount and deadline.
For example, a person wants to achieve having his own house at 40 years old. That time is when he anticipates to have saved roughly US$150,000, which is approximately half an average house’s cost.
b. Multi-goal and open saving
This method of building one’s life savings does not involve any deadlines and ceilings. A person merely continuously grows his life savings without a particular major life goal earmarked for financing.
The time will eventually come for that objective, yet the significant matter is to raise money for any major personal targets.
As a person becomes an adult, he acquires important properties in his life, such as his own home, car, life insurance, and so forth.
Life savings is the money that serves as one’s financial preparation for major life-changing events or personal goals. These funds help turn important life plans into realities.
In building one’s life savings, a person should have the discipline. He should know that earning and managing his own money is a source of pride and offers security. Having one’s own money and understanding how to manage it properly indicates his maturity and sense of responsibility as well.
A person’s attitude about the money he earns and saves and how it ranks in significance compared to his other priorities determine how successful he is in controlling his hard-earned funds.
Thus, acquiring sound life savings management is important and advisable to be learned early in one’s life. After all, this life skill forms the strongest foundations for having good money perspectives in one’s life. Possessing good life savings management skills also enables a person to achieve any important personal goal.
References:
https://financesonline.com/life-savings-101-taking-control-of-your-money-your-life/
