Knowing your financial goals and what you would like your money to do for you can determine whether your savings are an investment or a way for you to avoid borrowing money that comes with a high-interest rate. Here is what you need to know.

Understand your financial goal

There are many reasons why people open a savings account. Establishing what you want to achieve will determine whether your savings can be used as an investment or as a financial buffer for emergencies, retirement or a dream you wish to achieve. Knowing what you want to achieve can help you choose the best account to match your goals. You can speak to a certified financial advisor to help tailor your finances to reach your goals.

Saving for the future

Savings can be an investment if you are planning towards growing and protecting your financial future. According to key findings of Old Mutual's Savings Investment monitor, only 30% of South Africans save for emergency expenses, while just 58% make a contribution to formal retirement savings.

Saving towards retirement, education or paying off your dream house can be seen as an investment. However, it is equally important to protect what you have worked so hard for by having a life insurance policy in place to take care of you and your loved ones long after you have passed away.

Making better money moves

Being caught in a situation where there are no emergency savings in place can leave many South Africans financially vulnerable. It can have a domino effect that ends up pushing many people into situations where they end up making bad financial decisions that impact them long after the ordeal is over. Any form of emergency savings can prevent you from taking loans that come with high-interest rates. Remember to set an amount that you will be able to contribute monthly without putting a strain on your finances.