Life is always going to happen. There are always going to be unexpected events around the corner and they usually hit us right in our wallets or bank accounts.
Whether it is the plumbing problem, car breaking down or as serious as a job loss having a savings account will provide a cushion to help ease the blow when these events occur in our lives.
Having a savings account will not only help you improve your financial picture but it can provide you with a safety net when tough times come your way. This combined with a saving plan is an essential practice to help you build wealth and maximize your financial success.
I think everyone should have a savings account, after the checking account. We all have debit or cash cards. Most people deposit their pay check in their checking account which is linked to their debit card and swipe away to one transaction to the next and a savings account might seem foreign or old fashion.
Here are a few of the benefits to having a savings account:
Piece of Mind: In this difficult economy placing your good hard earned money in a stable and safe place should give you some piece of mind. The money you place in a saving bank account is protected by the federal government (up to $250,000 per depositor) by what is known as Federal Deposit insurance Corporation (FDIC) Insurance.
Earn Money While You Save: You can earn interest on the money you deposit in your account while you are saving for college, vacation, car down or house payment.
Achieve Short Term Goals: This a great tool to help you achieve your financial goal. Some banking institutions will allows you to give your account a name and to set the dollar amount goal. Whenever you log onto you account you can keep track of your goal. These accounts are easier to access and do not have penalties associated if you need to access your money for an emergency.
You are less likely to spend it: If you put your money in a bank savings account, chances are you are less likely to spend it versus if you were trying to save it in your checking account or hiding it under your bed.
Types of Accounts
Traditional Bank Saving Accounts: The benefits are listed above.
Money Market Account: This type of account is best for building up long term saving goals that you do not need to access right away. This would be a great vehicle to use to saving for your emergency fund or house down payment. It is easy to access just like a general saving account, however banks put restrictions on the amount of checks you can write form the account and there is a minimum balance required.
Certificate of Deposit or CD Account: This type of account is best if you have cash that can be idle for a set period of time. A CD is a debt instrument that issued by the bank that pays interest. In other words, you are lending the bank money for a predetermined time period and will earn a set interest rate at the time of maturity. This type of account has a minimum deposit amount, is FDIC insured and yields higher interest rates than a regular savings account.
Sometimes we can only see what is in front of us and that could be the financial issue that we are facing today. Our viewpoint is myopic and we need to widen our scope to sometimes see the bigger financial picture and realize that if we choose to save one dollar or twenty dollars a week not only is it a good start but we have to begin some where. Start saving those Benjamins because it adds up.
It is my desire that you are inspired to be good steward over these three areas of your life: Time, Talent, Treasure. Time, you must learn to manage your time; talent you have skills and gifts and lastly treasure, your finances need to managed appropriately. All of these areas work together, when they are managed properly you will be able to become A BETTER YOU!
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