Is start spending only paper money good option for me?

maxwell · Apprentice Joined: 18 Aug 2006 Posts: 4

I have recently been listening for advice to make some savings. Now, I am not too experienced and I have been looking to make the best choice possible, especially since I need to open a bank account for other purposes. I would like to know is starting spending only paper money, while jar-saving coins good option for me. Thanks in advance.

fraser · Apprentice Joined: 03 Feb 2007 Posts: 3

Knowing about the inflation is very important in terms of money supply. Simply put, money behaves by the same principles as other goods. If there is more of it, it is less valuable. So, when the supply is high, value drops, which means rise of prices to cover for that fall. Rise of prices is practically the definition of inflation, and it triggers less spending power as well. Saving coins is pretty common way to make your money pile up, but it is not wise for two reasons. First, precisely because of the inflation, ''sitting'' money loses value, and coins cannot bring you significant profits in the first place. That said, you should check with a financial adviser what is a good savings scheme.