Saving means spending less today so that we can do so in the future, either because we have a specific spending goal or because we want to prepare for needs that may arise later on and thus face uncertainty more comfortably. But it is not only that. <\/p>\n
Saving is a deliberate and planned act. Being unable to spend, as happened to us during the lockdown, should not be considered saving in the strict sense, as everything suggests that the future return to economic and health normality could lead to a significant share of that unspent consumption being realised\u2014consumption that was pent up and is now beginning to be released. Saving is not only about building up reserves; it is also about making them profitable, so the return offered by the different types of assets at any given time is a determining factor. <\/p>\n
In Spain, more than 40% of households\u2019 financial assets are held in cash and deposits. This is a very high percentage, but it is in line with what happens in Europe given the imbalance between the returns on safe assets and those that entail risk, and it comes as no surprise, especially if we consider that the alternative to deposits in terms of security and confidence is public debt, much of it with negative yields. The rest of the distribution of Spanish households\u2019 financial assets is made up of equity holdings in companies (25% of the total), insurance and pension funds (16%), and holdings in investment funds (15%). This last segment increased its share the most over the past year, in step with the rise in financial markets amid greater economic certainty after the pandemic. <\/p>\n
In Spain, housing is the main wealth decision for families, a behaviour that goes beyond a purely financial decision. In this country of homeowners, the population\u2019s commitment to housing as the primary vehicle for saving and investment is more than evident\u2014a trend with little sign of changing, despite IMF warnings, which a few weeks ago highlighted the upward spiral in housing prices worldwide as a result of low official interest rates and inflation in some financial asset markets. <\/p>\n
Against this backdrop, financial assets are those that best meet the three principles on which saving is based: availability, consistency and return.<\/p>\n
Following the first principle\u2014availability when it comes to accessing our savings\u2014will give us room to act in times of need. If we save to have money to meet a future need, it is essential that we can access it easily and quickly. <\/p>\n
Paying attention to the second principle\u2014consistency\u2014is essential to follow our savings plan and protect ourselves from impulses fuelled by the information age in which we live. Although digitalisation makes it easier to access information for real-time analysis, it also requires a measured approach to our wants and needs: impulses must not dominate our financial decisions. <\/p>\n
The third principle\u2014return\u2014is not an objective in itself when saving, but it does influence what we do with our savings. At this point, the financial repression generated by the low interest rates set by central banks intensifies financial asset inflation and the risks involved in investing. <\/p>\n
How should we save? And how can we safeguard our savings? There is no specific, universal answer to these questions, but there are some guidelines that can help us along the way. <\/p>\n
Financial education, especially if acquired at an early age, and sound professional advice tailored to our saver profile can help us make the best decision at any given time, although they are not a guarantee of success in every case. We all make decisions freely and are responsible for their consequences, so calmly analysing all the necessary available information contributes to the proper management of our personal finances, to managing our money better\u2014something that is necessary at every stage of life. <\/p>\n
On the contrary, we should not be swayed by poorly founded recommendations or by impulses or prevailing opinions. Nor should we fall into risk aversion or excessive confidence that leads us to make hasty, ill-considered decisions. Even if we were right, we would not know how to justify it, and we could develop a bad habit that would cause problems in the future. <\/p>\n
Each individual\u2019s saving goals are as personal as their life priorities and value system. Education and training\u2014ours and our children\u2019s, for example. Moreover, in a world driven by innovation, investing in financial education should be a priority in order to equip future generations with the best tools to respond to a world that never stops changing\u2014for the sake of their individual decisions and of society as a whole. <\/p>\n