Most people have a checking account and have a debit card too, but so many people still don’t have a savings account set up.
Opening a savings account is not a necessity, but it is an effective way of saving money for a rainy day or preparation for any potential financial hardship.
The subject of opening a savings account can be confusing to some, and even uncomfortable to address. The cost of living is continuously rising, which makes it difficult for most people to imagine dedicating a portion of their budget to a savings account.
However, there is no harm in visiting your bank and asking about a savings account because there are different savings accounts to entertain different circumstances.
What is a savings account?
In short, a savings account is a financial tool provided by a bank that enables you to keep your money safe.
There are various savings accounts to consider, but the standard savings account allows you to grow your money and can even lead to earning interest over time.
It is a useful tool to help you save for short-term goals, such as building an emergency fund for future endeavors.
We have established that most people don’t, for various reasons, have a savings account but there are ways to open an account that entertains your income and lifestyle.
Here we will outline the reasons why you should consider opening a savings account:
Unexpected payouts
No one can predict a sudden hardship that requires expenses to solve it. Whether it be a broken appliance or an expensive automobile repair, it will help if you have a savings account to cover your back.
These circumstances can put a massive dent in your finances, and although you probably have arranged insurance for your goods, you will still encounter those inconvenient obstacles.
Extremities such as vehicle accidents, serious illnesses, or a fire at your residence can make for substantial out-of-pocket costs, which is why a savings account will cover the gaps, and avoid potential debt.
Major Life Events & Goals
You will see in all the guides and hear from family members to start saving for retirement, but what about the other major life events?
Milestones such as college, marriage, buying a house, children, etc. are inevitable, and all of those life goals are costly. Even for those who make travel their main priority, having a substantial amount of cash to fulfill those goals is essential.
Security
The money you deposit in a monkey market or savings account is protected by FDIC insurance, which means the government will substitute your funds up to a certain amount should your bank experience bankruptcy and close.
If this happens, without a savings account, your capital can be lost, destroyed or stolen, which is why it is wise to deposit your money in an interest-bearing savings account – you can also earn some interest in the process!
Education
Tuition rates at most colleges and private schools are very high and are only rising; therefore, opening a savings fund can help families in the long-term, providing funds for college education and private schools.
A savings fund can make the process of paying for a child’s schooling much easier and less stressful, for both the parent and the child, and will overall lead to a better job and life opportunities.
Retirement
Creating a savings fund can be an essential resource for retirement. It enables individuals to retire earlier and provides them with a comfortable amount that will improve their quality of life after retirement.
Recap
For the reasons illustrated above, creating a savings account can be one of the most rewarding things that a person can do and can set the tone for many aspects to life.
Savings funds cover unexpected hardships, improve the quality of life during pivotal milestones, and will make for a more comfortable retirement.
Whatever your financial circumstances, you should consider finding a savings account compatible with your lifestyle and start contributing to what could be a more comfortable and enjoyable future.
By, Joseph.