Saving and Insurance — Flashcards

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Saving is the amount of income carried forward to the future after meeting current expenditure. It is the surplus of income over consumption.

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Saving = Income – Consumption. This means income left after spending on current needs is called saving.

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Saving is calculated over the whole accounting year because some expenses, such as fees and tax, are yearly. Monthly figures can give a wrong picture of actual saving.

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Mr. X's total income was Rs.1,86,000, total expenditure was Rs.1,81,000, and saving was Rs.5,000. The saving is found by 1,86,000 – 1,81,000 = Rs.5,000.

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Saving increases future income because the saved amount remains available for later use. It also acts as security in emergencies, such as illness or temporary loss of work.

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A family saving box is an informal way of saving small amounts at home. It is unsafe from theft, money remains idle until the box is opened, and no interest is earned.

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Post offices and banks keep money in a secure place, provide pass books, and pay interest on savings. They also help use idle money for useful economic activities.

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It is a formal saving account where an individual can deposit money in a post office. A minimum deposit of Rs.50 is needed to open the account, and a minimum balance of Rs.50 must remain after withdra…