4.1 What to do with savings?

One benefit of careful budgeting is that it helps you to save regularly. But what should you do with the money that you save?

The answer to this question depends on your financial goal. If your goal is to use this money within the next few weeks, then probably keeping your money in your bank account is fine.

However, if you are saving to meet long-term financial goals (say in the next 5–10 years or later), then you should consider alternatives that make your money grow. Yes, money can grow, but not on a tree.

How does money grow? The key idea is that you can deposit your savings in a savings account that pays interest on your savings. You will learn more about interest rates in the next session.