Financial Literacy And Making Deposits

Financial literacy is the ability and knowledge to make financially responsible decisions. It affects every person’s daily life, as it is about providing the future lives. It is vital for the future life to be able to save and increase the earned income. One of the safest ways to do it through second-tier banks.

The commercial banks accept deposits and lend money to the borrowers. In the 1st case the banks can provide deposits with compound interest. Compound interest is basically interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Therefore, compound interest is attractive for the population than simple interest in case of deposits. It helps to navigate the services and use them with an understanding of the advantages, disadvantages and risks, be able to assess the market situation, manage finances: keep a budget, accumulate savings and, if possible, avoid debts, as well as plan spending. In most cases, people do not make reasonable decisions regarding financial affairs, consumer and mortgage debt increase, a large number of scammers appear, crime rates increase, economic stability falls, and people invest in unreliable banks. Thus, the state has to intervene: pay compensation and calm social unrest in society. For example, on November 1, 2017, banks submitted almost 30 thousand applications for changing payment conditions. To support borrowers, they developed a state program, therefore, the state allocated about 130 billion tenge for this from the republican budget.

Every person should be able to make financial decisions. No one teaches children this. For example, in China, financial literacy has long been introduced into schools, it has been taught at the level of understanding from the first grade. For example, what happens with the money in the bank. Children are trained in mathematics interest calculation, how to calculate the income on the deposit or to evaluate the terms of the loan. This is very important and effective when such knowledge is embedded in everyday life. A bank deposit is a bank deposit, the money that is transferred to a credit institution for the purpose of generating income in the form of interest. You transfer free cash and in return receive income, in the form of a monthly added fixed percentage of the deposit amount. Therefore, the higher the percentage of the deposit in the bank, the higher your income, the more money added monthly to your deposit amount. A banking institution divides a deposit into 3 types: non-fixed deposits are a deposit with a low rate of return, but allow you to withdraw the amount at any time before the expiration of the contract; time deposits - deposit interest rates are higher, however, there are restrictions on early closing of the deposit; savings deposits are a deposit that has the highest yield, but there are increased requirements for early withdrawal of money.

Deposits are the most profitable way to save money and make some money, unlike safer investments. For example, in the purchase of stocks, investments in gold, even in real estate. If you are planning a large expensive purchase: a car or an apartment, a foreign trip, etc. - to keep money on the deposit is more profitable than at home or on a bank card. Money must work and earn. Money must make money. A big role is played by time and the regularity of additional contributions, since the more money will be on the deposit, then in 15-18 years a considerable amount will accumulate on the deposit.

Therefore, the Japanese at birth give birth to a deposit in his name. However, we are not insured against inflation and devaluation. If the interest on the deposit is good, it keeps the purchasing power from inflation, then your money will not only be saved, but even in terms of inflation will multiply. Also, when you have money on deposit, this is a good calming psychological effect, as we are more confident in looking and believing in tomorrow.

18 March 2020
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