One is contributing to a decrease in debt, the other is an increase in, well, savings!

But the husband really shouldn’t scoff at having such a financially astute wife! Bottom line, an increase in net worth is still an increase!

Savings would be liquid assets (cash or money market mutual funds or other very short term investment instruments) that do not have a specific purpose – which is why I have very little in what I would term ’savings’.

It is really a bit of semantics, since I associate the term savings with money that doesn’t have anything better to do than sit in an interest bearing account. But that is my personal definition and I could understand why someone would think the opposite way.

I’m sure there’s some very technical definition of savings out there, but as I sit and try to think about what savings means to me, I have trouble putting it into words. I suppose the best I can think of right now is that I view any unspent cash that still has paydays before it needs to go out as savings. As much as I could lump investments in there, I tend to view invested money differently. Maybe it comes from having lived with someone who considered his TV an emergency fund. He did indeed drop it off at a pawn shop when the need arose.

I think that good debt such as owning a house with a mortgage is not actually direct savings; however, the equity that you build up with good debt can be used as a tool to increase your savings levels dramatically, if applied properly.

I always think you need to always continue to work on the act of savings, by paying down bad debts, building RRSP and other retirement and investment portfolios – but those aren’t liquid savings (as TMW husband would look at it).

The emergency fund, the day-to-day savings fund and the GIC’s that are going to mature in 3-6 months. Those are cash savings. I personally view savings as the short-term liquidity available to me should I desperately require it – things that I would be able to get cash from immediately, without affecting longer-term plans. If you can’t or won’t touch it, it’s not savings.

Plus, if you were to include RESP’s and RRSP’s as savings, you might as well consider the after-tax and after-penalty amount as savings, not what you see on your statements.

A person may be wealthy (by networth) but may be poor because there is not enough income for assets to pay his/her day to day expenses.

I agree with husband that savings may not equal to investment until and unless it is cashed. Its cash value may not be equal to value of investments at the time of redemption.

Having said, this is for educational argument. Practically, savings and investments converge to same if they are producing income.

I wouldn’t consider a house part of my savings. even though after it’s paid off “it saves” you money by not paying rent…

So, define these words any way you want, but make sure you are using the right criteria to make your choices.

Here is a quote from the RBC mortgage site:

“If you have made double-up payments during the term of your mortgage, you have the option to skip an equal amount of payments.”

This forms savings in my book, as the extra money I place against my mortgage is indeed retrievable, though not all at once. Were I in a situation where truly needed a lump sum, I could negotiate it with the bank. The real savings is the acute reduction in future payments I need make on the mortgage if I never need those savings, and the interest cost I save.

DAvid

I consider savings when I can have access to my money so it doesn’t have to be only in a bank account. Even though they are taxable upon withdrawal, RRSP’s are accessible money.

However, I would not consider RESPs in my savings but in my children’s savings instead. This money is not meant to be directly used by me, therefore, it is not “accessible”.

They’re both savings, but with very different purposes and time horizons.

Cash Account = savings that I’m investing. In an emergency I’d consider tapping into this

Cash Savings = this is all of the stuff in my high interest savings account. Thanks to ING allowing you to set up sub accounts we’ve got a couple of categories like household savings, vacation fund.

Savings to me is money that is readily available for purchases.

I guess it comes from saving to get something. I’m never going to save for a new TV or car or whatever by making larger mortgage payments or buying some stock and then selling (or getting a LOC) when I want to make the purchase.

The noun ’savings’ – I would consider this any money that is used in for something that is semi-liquid and kept inside your net worth statement. For example, savings accounts, GICs, non-registered stocks, registered stocks, cash under your mattress, or gold bars.