In which currency should I save money? – #MoniMonday
In dollars or colones? That’s the main question to ask ourselves when we’re choosing which currency to save money on. In a previous MoniMonday edition, we talked about the importance of setting saving goals. Now, we’re going a few steps forward to talk about something else related to our financial decisions.
Before beginning the lesson, take into account a couple of terms that will help you to read the rest of this article.
Exchange rate: the value of one currency for the purpose of conversion to another currency. it’s a reference for commercial transactions between different currencies.
Currency: A system of money in general use in a particular country.
To understand more about which currency to save money on, we looked for Esteban Porras, who is an experienced financial advisor. He answered all of our questions.
Usually, under what circumstances is it suggested to diversify or change the currency of a savings account?
If you need to save in small amounts for vacations, a car, a product that is being sold in dollars, it’s ideal to save the money in dollars. On the other hand, if you’re purchasing a household appliance, or some furniture, or some insurance that you’re paying in colones, then save in colones.
Regarding the “normal” goals that most people set for themselves, it’s important to understand what’s the main objective of this saving. Then, save in that same spending’s currency. The big advantage of saving both in colones and dollars is that you’re getting prepared for different purposes according to the currency that you’ll need later.
Can you take advantage of the “ups and downs” of the exchange rate to define which currency to save on?
There are people that try to focus their savings in dollars with the purpose of taking advantage of the exchange rate in the future, but then, what they’re really doing is betting on something that is filled with uncertainty, as the exchange rate moves up and down.
There’s the tendency for the dollar to go down between November and December as the big transnational corporations that pay in dollars purchase in this currency to pay for their Christmas bonus. It might be common for someone reading this article to be considering exchanging their dollars for colones in November to realize that, in the end, the dollar is not going down, and they’re not going to receive that big difference as originally planned.
The only people that are really seeing a difference, in this case, are those who save their money in dollars, for the goals set in the long run: buying land, the retirement expenses (probably the dollar will be up high for when that moment comes), or making a relevant investment in the upcoming years.
What’s the cost of changing currencies?
You should always check the exchange rate in the financial institution of your choice, before exchanging currencies.
Sometimes the dollar will be higher than you expected, and suddenly it can go down abruptly without your awareness. Here I quote Financial Analyst and expert Gerardo Corrales: “There’s nothing more frightful than the dollar”. But you should not be worried about this. Save according to your goal.
Which are the most trustworthy resources for someone to get informed about when or how to choose it’s saving’s currency?
It’s ideal for people to receive some kind of financial session with an advisor. If the goals and upcoming expenses are not clear, or they don’t are really sure about what currency to choose for these expenses, it’s always good to learn about basic finances with a local professional advisor.
I would also suggest for them to read articles about these topics, so they can feel closer to saving in different currencies. As they feel more comfortable with this, they will be able to construct their self-opinion for them to choose later.
Was this information of your help for you to decide in which currency to save money on? Let us know in the comments section. If you’re already an OMNiMoni user, and you want to have better control of your financial situation, then you’ll appreciate the reports and graphics available in the Super App.