LIDETA CATHOLIC CATHEDRAL SCHOOL

SUBJECT: CIVICS

GROUP ASSIGNMENT: II
GRADE 10: SECTION A

TITLE: SAVING AND ITS CULTURE

PREPARED BY:

1. ____________________________

2. ____________________________

3. ____________________________

4. ____________________________

Submitted To: ______________________

JUNE 2023, Addis Ababa

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 Contents

1. SAVING ................................................................................................................1
1.1. Introduction ........................................................................................................................ 1
1.2. Definition and Meaning of Saving ..................................................................................... 2
1.3. Importance of saving.......................................................................................................... 3
1.3.1. It’s so easy.................................................................................................................. 3
1.3.2. Security for the future ................................................................................................ 3
1.3.3. Independence ............................................................................................................. 3
1.3.4. Being free from debt .................................................................................................. 4
1.3.5. Being able to buy a new home ................................................................................... 4
1.3.6. Home Improvement ................................................................................................... 4
1.3.7. Holidays and leisure time........................................................................................... 4
Conclusion....................................................................................................................5
Reference......................................................................................................................6

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 SAVING AND ITS CULTURE
DEFINITIONS, EXPLANATIONS AND RELATED CONCEPTS

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 1. SAVING
1.1. Introduction

Saving is income not spent, or deferred consumption. Methods of saving include putting money
aside in, for example, a deposit account, a pension account, an investment fund, or
as cash. Saving also involves reducing expenditures, such as recurring costs. In terms of personal
finance, saving generally specifies low-risk preservation of money, as in a deposit account,
versus investment, wherein risk is a lot higher; in economics more broadly, it refers to any
income not used for immediate consumption. Saving does not automatically include interest.

Saving differs from savings. The former refers to the act of not consuming one's assets, whereas
the latter refers to either multiple opportunities to reduce costs; or one's assets in the form of
cash. Saving refers to an activity occurring over time, a flow variable, whereas savings refers to
something that exists at any one time, a stock variable. This distinction is often misunderstood,
and even professional economists and investment professionals will often refer to "saving" as
"savings".

In different contexts there can be subtle differences in what counts as saving. For example, the
part of a person's income that is spent on mortgage loan principal repayments is not spent on
present consumption and is therefore saving by the above definition, even though people do not
always think of repaying a loan as saving. However, in the U.S. measurement of the numbers
behind its gross national product (i.e., the National Income and Product Accounts), personal
interest payments are not treated as "saving" unless the institutions and people who receive them
save them.

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 1.2.Definition and Meaning of Saving

Saving is closely related to physical investment, in that the former provides a source of funds for
the latter. By not using income to buy consumer goods and services, it is possible for resources
to instead be invested by being used to produce fixed capital, such as factories and machinery.
Saving can therefore be vital to increase the amount of fixed capital available, which contributes
to economic growth.

However, increased saving does not always correspond to increased investment. If savings are
not deposited into a financial intermediary such as a bank, there is no chance for those savings to
be recycled as investment by business. This means that saving may increase without increasing
investment, possibly causing a short-fall of demand (a pile-up of inventories, a cut-back of
production, employment, and income, and thus a recession) rather than to economic growth. In
the short term, if saving falls below investment, it can lead to a growth of aggregate demand and
an economic boom. In the long term if saving falls below investment it eventually reduces
investment and detracts from future growth. Future growth is made possible by foregoing present
consumption to increase investment. However, savings not deposited into a financial
intermediary amount to an (interest-free) loan to the government or central bank, who can
recycle this loan.

saving, process of setting aside a portion of current income for future use, or the flow of
resources accumulated in this way over a given period of time. Saving may take the form of
increases in bank deposits, purchases of securities, or increased cash holdings. The extent to
which individuals save is affected by their preferences for future over present consumption, their
expectations of future income, and to some extent by the rate of interest.

There are two ways for an individual to measure his saving for a given accounting period. One is
to estimate his income and subtract his current expenditures, the difference being his saving. The
alternative is to examine his balance sheet (his property and his debts) at the beginning and end
of the period and measure the increase in net worth, which reflects his saving.

Total national saving is measured as the excess of national income over consumption and taxes
and is the same as national investment, or the excess of net national product over the parts of the
product made up of consumption goods and services and items bought by government

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expenditures. Thus, in national income accounts, saving is always equal to investment. An
alternative measure of saving is the estimated change in total net worth over a period of time.

Saving is important to the economic progress of a country because of its relation to investment.
If there is to be an increase in productive wealth, some individuals must be willing to abstain
from consuming their entire income. Progress is not dependent on saving alone; there must also
be individuals willing to invest and thereby increase productive capacity.

1.3. Importance of saving

Here are 7 great reasons why we think putting a little aside from your salary is worthwhile

1.3.1. It’s so easy

Nobody wants a complicated life and here at Stockport Credit Union, we believe the more
straightforward the better. That’s why we’ve made it super easy to save directly from your
salary. Saving in this way means the money has been put aside before it has even hit your bank
account. You can see the amount on your wage slip and watch your savings grow in our online
members’ area.
1.3.2. Security for the future
One of the reasons it is best to start saving as early as possible is that we can never be sure what
the future may bring. If you lose your job through redundancy or through illness, or you have to
take time off work to bring up children, it is vital that we are able to provide not just for
ourselves but for those who may depend on us, e.g., elderly relatives, children. Right now we do
not, to put it mildly, live in certain times and it is those who have saved who are best placed to
ride out the storm.

1.3.3. Independence
Independence is another vital aspect of our mental health. With independence, we are much less
reliant on friends, family, bank loans, unemployment benefits, and are free to make more choices
about what we can do with our lives. Starting to put a little aside is a great move towards greater
independence and doing it through payroll means you will barely miss it.

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 1.3.4. Being free from debt

Debt can cause great anxiety, and that can cause a terrible strain on our mental health. When we
are in debt we can be at risk of home repossession and have less money to spend on food and
drink, our homes, cars, education, and training courses, and we find it more difficult to provide
for those who may depend on us. By putting aside a little every week or month and creating a
rainy day fund, it means that you can avoid debt when something goes wrong.

1.3.5. Being able to buy a new home

Saving money allows you to buy things that you can’t afford regularly and getting on the
property ladder is often seen as a vital landmark in life, and the more money we have, the earlier
it is likely to happen. Saving money will give you a real sense of achievement when you manage
to save up for the home that you want.

1.3.6. Home Improvement

Be it buying a new television set, a new computer, garden maintenance, repairing burst pipes,
broken windows, or sorting out leaks, home improvement is something that is a vital fact of life.
Is your house in exactly the same state it was 5, 10, 20 years ago? Ongoing maintenance can be
costly and is worth planning in advance for.

1.3.7. Holidays and leisure time

On a lighter note, saving money means we have money more to spend when times are difficult.
As the lockdown comes to an end, and pubs and restaurants start opening, the long months of
lockdown seem to be coming to an end (hopefully!) Nights out with friends are not just good for
our mental health, they benefit the local economy, and, by extension, the UK economy as a
whole. A time when we can comfortably look forward to taking a holiday abroad seems a long
way off, but why not start saving now? Money saved today is money to be spent tomorrow; why
not spend it on holidays abroad? And remember, the more you save, the more you can think not
just about the holiday next year, but the one after!

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 Conclusion

Saving money may seem like a hard thing to do - especially if you don't have a lot to start
with. But even coins add up, and as you see here, saving a little can help you do a lot more for
yourself, it can help you make bigger changes in your life, be in control, and be less dependent
on others. Sometimes though, it's impossible to avoid borrowing money. Anything we borrow -
even from family or friends - must be paid back. Generally, we pay back a lot more than we
borrow so we end up spending more than we realize. Remember, if you can't afford to save a
tenner each week, you can't afford to pay back a tenner each week on a loan!

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 Reference
Beauchemin, C. and Schoumaker, B. (2005). Saving and investment Does the Level of Saving in
household Matter? World Development, 33(7):1129–1152.
https://education.Savingassociation.org/resource/save/
https://en.wikipedia.org/wiki/SacvingCulture