A lot of people have a checking account and even a debit card but have still not set up their savings account. Around 26% of the total population of adults has no cash spared for an emergency, and only 36% of adults are just about to spare some of their money in preparation for retirement. This article will tackle the importance of having a savings account and why you shouldn’t live without it.
Here are some of the most compelling reasons why you need to have one:
- Unforeseen circumstances that require money.
It’s your responsibility to prepare for any unforeseen circumstances that might need huge spending like someone dear to you being hospitalized or a major vehicle repair. These events may impair your financial capability if you haven’t saved some money. Although you have perfectly arranged your insurances to have things covered, you still cannot say that you’re protected from everything. A fire in your house or an accident can surely produce some out-of-the budget costs. That is why it’s important that as early as now, you should be doing your research about the best online savings account for you to save without the hassle of waiting in line at a physical bank.
- Protection for your assets.
It’s known that the returns for your savings are not as huge as the other investments. Other investments include the stock market, shares, and bonds, as they promise a much higher rate of investment returns. However, if you plan to tie up all your money as a capital for these investments, there is also a risk of losing them all. So you might as well put it in a safe place where there is little to no risk of losing your hard earned money.
Just a tip, online banks are becoming a trend now. Therefore, find the best online savings account provider that will suit your preferences and help you avoid the hassle of doing bank transactions.
- Security is certain.
The money you put in a savings bank is protected and covered by the FDIC insurance. What does it mean? When a bank decides to close for bankruptcy and other reasons, the government can give you some of the funds that you put in there (up to a particular amount.) Aside from that, it’s also beneficial because of the interest rates that you’re getting from the savings bank.
- The money is always available when you need it.
In opening a savings account, most banks provide an ATM card or a passbook for the client. Therefore, when the emergency time comes, you can always withdraw your money right when you need it. Keeping them at home is not a good option as it may be lost or stolen when someone breaks into your house. On the other hand, if you put your money in stocks and bonds, you can’t easily get the money from it in dire times of need, which means that getting a savings account is the most viable and convenient option. Aside from being safe, it’s always readily available as well. You just have to understand your account’s terms and conditions as there are banks that put limitations on the allowable monthly withdrawals. Some banks charge penalties to those who exceed the limit.
- Make the money you deposit work its way up.
As much as possible, try to find a bank that offers high-interest rates for their clients, and you’ll be good to go. Since the interest is good, the money you put in there will surely grow by just letting it sit there. There are some tools available online to compare the interest rates provided by some credit unions and, of course, banks.
When you open a bank account, make sure you automate it to deduct money from your checking account automatically. This way, you will never forget to deposit money in your savings account every time you get your pay. The market for money automation is wide, and there are tools that are available to help make your money-saving goal as easy as money spending.
In addition to that, there is this agreement in the financial industry that when you have a savings account, you’re more likely to have a peaceful mind since it helps a person plan for what he/she wants and needs to purchase.