If you ask an economist, he would give you a following definition.
E = C + I
Where, E is Household Income
C = Consumption
I = Investment
Well if you wear the hat of an economist, above might make sense but lets wear the hat of an Investor and try to see things. As an investor, I am only interested in the “I” part of the above. What do I get to invest and how do I get to invest?
If I see from an economist point of view if I save money, i.e put my money in bank account is an investment (because obviously it is not the consumption). But does that hold good for an Investor. I am trying to put my arguments for this.
Lets first try to understand the meaning of word “Saving”. Saving has various meanings as an English word. Let me mention couple of definitions which might be of our interest:
1. To avoid unnecessary expense or expenditure; to prevent waste; to be economical.
2. To keep from being spent or lost; to secure from waste or expenditure.
3. To make safe; to procure the safety of; to preserve from injury, destruction, or evil of any kind; to rescue from impending danger.
4. To keep in a safe condition; safeguard
Yes there is a huge list of meanings you could find on net but the above four were able to describe it broadly.
Most people when put their money in bank they consider it as saving, but I think it actually not saving but its more of a “Safing” (Safeguarding your money) .
If you go by the dictionary meaning of word “Saving” described in point 3 and point 4 then yes the money in your bank is your saving but if you think as an investor “Savings” makes sense as definition in point 1 and point 2.
So in layman terms how do I Save.
If you could avoid purchasing an unnecessary gift for your wife or girlfriend, you save.
If you could buy a Beneton Shirt or expensive shoes at 60% discount because you know the operations manager, you save.
If you could buy a property in an upcoming area in very reasonable rates because one of your childhood buddy happens to be a property dealer, you save.
So broadly you save money if you could get anything in lesser cash which is worth more for the rest of the world. You could attribute this either to your PR, Contacts, Network or Negotiation Skills.
But to me if you keep your money in your bank account, its not “Saving” its “Safing”.
