Savings and Investment: A Key to Financial Freedom
Savings and investment is a critical subject that people need to understand for proper management of finances. In particular, financial discipline is vital for individuals who want to succeed in investment. Michelle Singletary's Invest For Retirement or Save For College? What Your Child Should do With Summer Earnings depicts the significance of saving at a young age. She gives a crucial message to all college students to develop a habit of saving money regardless of the amount. Young people must note that investment is the only way to achieve financial freedom at the age of retirement. The author discusses some important things that parents should consider to facilitate savings and consequently investment.
The Importance of Starting Early
Singletary talks of a case where a husband and wife agreed with their children that parents would cover tuition, board, and room expenses. They then told their children to use their summer earnings to buy relevant books and for personal needs. Financial experts suggest that people should start saving at a young age. As such, they are likely to invest and have more money for retirement. Peter Hafner, a certified financial planner, asserts that young people should develop a habit of saving even just a small amount of cash (Singletary). However, one should not save money while having an outstanding loan. For example, a college student should first pay the tuition balance with summer earnings to minimize the debt. As such, savings should not be prioritized when a person has unsettled debts. Proper saving and investment ensure financial independence. Thus, young people will minimize the probability of taking loans and have everything they need at school. The author wants readers to understand the significance of saving for retirement. In the past, many people started saving at a late age hence they were forced to work at old age to provide for necessities. Specifically, saving is not something for the working class only. Everyone should keep some money depending on their income. If the salary increases, the percentage of savings should also rise. Prudent use of finances enables one to have enough money to cater for their needs and remain with some amount to save for investments.
Capitalism and Financial Goals
The first and most significant principle of sound financial management is to spend less money than one's earnings. The Keynesian theory of economics portrays that government intervention is critical in reviving a subdued economy. However, even if the state intervenes, without savings, individuals cannot use the opportunities given to invest in different realms of the economy. Singletary recommends that college students should start saving early. She understands that individuals can accumulate sizeable wealth by investing their savings. Karl Marx, a German economist, argued that capitalism could only be achieved through savings and investment. Capitalists have more savings and usually invest in any business that can generate profit thus they are wealthier than the bourgeoisie. Therefore, people can only achieve their financial goals through savings and investment.
Conclusion
To sum up, savings and investment enable people to develop financially and achieve various objectives within a specific period. For example, it is evident that college students can save their summer earnings and later use them for personal expenses. They can also pay the outstanding tuition fee which reduces their debts. Savings and investments foster financial freedom at the age of retirement.
Work Cited
Singletary, Michelle. “Invest for retirement or save for college? What your child should do with summer earnings.” The Washington Post, 2018, https://www.washingtonpost.com/business/2018/07/16/invest-retirement-or-save-college-what-your-child-should-do-with-summer-earnings/?utm_term=.4ed82bbd595e. Accessed 2 Nov. 2018.
