1. What do you mean by savings?
Saving is setting aside money you don’t spend now for emergencies or for a future purchase. It’s money you want to be able to access quickly, with little or no risk, and with the least amount of taxes.
We should save money for the future. Money is saved for education, for buying a home, and unexpected requirements like medical treatment and others.
Part of the importance of saving money is to build cash reserves so you can take calculated risks with less worry. If you don’t have any savings, it may be harder to pursue certain passions. Take starting a business, for example. To be a small business owner, you’ll need financial backing to get it off the ground.
2. Why is it important to save money?
The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things.
3. What do you mean by expenditure?
An expenditure is money spent on something.
It is simply a purchase of products, goods, or services. Anyone can incur one: Buying a coffee, making an Amazon purchase, and hiring a gardener are all examples of expenditures you might encounter in your day-to-day life.
4. Difference between Savings and Expenditure:
Savings help a person to satisfy his future wants, while expenditure satisfies his present requirements.
In the case of savings, goods and services are applied indirectly to the satisfaction of wants, while in the case of expenditure, goods and services are applied directly to the satisfaction of wants.
Savings increase the income of a person whereas expenditure decreases the income of a person.
5. Discretionary and Non-Discretionary Expense:
Discretionary expenses are things you want, but aren't essential. For example, buying a piece of furniture, vehicle or a T.V. is a discretionary expense. On the other hand, bills such as rent, home loan payments and utilities are non-discretionary expenses.