With the economy in free-fall and with no end to the credit crunch in sight, savings are a hugely valuable resource to have. In times of economic uncertainty lending becomes scarce and credit, freely available to most when the economy is stable is suddenly a considerably harder benefit to be awarded.
It is at times of economic instability when savings whether liquid or in other asset forms such as bonds or ISA’s, truly show their worth. Savings, throughout a credit crunch, hold a greater intrinsic value than their monetary worth alone may indicate as evidenced by banks targeted marketing aimed at at attracting new savers throughout the credit crunch in order to underpin their financial security.
Saving money is difficult during a normal economy anyway but it can be a deflating experience during a recession and if you are one of the lucky or smart percentage to have, as the experts indicate, at least two years of normal living expenses salted away then you should have a flexibility not afforded to the majority. The financial stability provided by savings throughout times of economic crisis affords the saver an amount of breathing space that due to the reduction in the amount of credit awarded might not usually be available and the value of that alone is immeasurable.
Of course there is the monetary value of the savings themselves. Savings of any amount can be of great assistance in securing credit facilities whether just a credit card or the larger undertaking of a mortgage or unsecured loan. Lenders are much more likely to award credit if the amount is potentially covered by savings in the event of a default and lenders are also more likely to grant a mortgage application if there is a substantial deposit in place via savings.
Banks are targeting savers with ad campaigns offering interest rates as good as can be offered within the scope of their countries base interest rates and now is perhaps a good time to look at investing money into companies whose stocks are already at a market forced, relatively low price. The economy moves in cycles and although we are experiencing a depression currently, at some point the market will begin to experience the green shoots of recovery. Savings will afford you the luxury of investing capital in companies or assets that might usually be out of reach and there can certainly be some bargains to be had.
The habit of saving money itself can also hold great psychological value during an economic crisis. Behaviours learned and indoctrinated during times of relative wealth can stand you in good stead during a recession. Frugal spending and thrifty habits learned during a strong economy not only hold the virtue of saving money itself that can be of huge value throughout a recession but also have the additional benefit of getting you used to living through minimal expenditure. It is not so emotionally difficult to live with spending as little as possible if it is a condition that you have already lived with for a number of years or months.
Savings hold a value greater than the sum of their parts during a recession. The monetary value itself, underpinned by the emotional value of being accustomed to saving money and living frugally, will provide many with a sound financial and pyshological footing throughout these times of economic difficulty, relieving the pressures of living through a recession.