Savings accounts can be a life saver – Thought about opening one? Why haven’t you? Reports show that a staggering number of Americans have less than $1,000 in a savings account. Start a savings account to begin saving money today.
How much money you need in a savings account depends on your unique situation, how you spend money and your lifestyle. The classic Emergency Fund “rule” is to ideally have 3-6 months of your regular income set aside within savings. Imagine if something drastic were to happen to your income, how would you get by? What do you have to fall back on?
Savings Accounts – Starting the Habit is the Hardest Part
Find a savings account that works for you and your lifestyle. Some banks will require a small minimum deposit and some will not. If you have another account with a financial institution you can arrange to have transfers to and from these accounts.
Understand where your money is going. If you don’t know how you’re spending your money you won’t know where you can save. Start with a weekly look at spending habits. Recording your expenses is helpful to see how and where you’re spending you’re money. Check out our Spreadsheets section for tools that can help you get organized.
Saving Accounts – Want Vs Need
Figure out your wants and needs. Do you need to go out to lunch everyday or could you save that money every week for a decent start to your savings? Small changes can add up to big savings.
Start small. The start to saving money is a mindset. It can also be overwhelming. Start with the weekly look into your spending habits. Find one thing you can live without for a month. Even if it is only $5 or $10 dollars commit to sending that amount directly to a savings account. You can also set an automatic withdraw on your bank account specifically for the amount.
Store the extra cash. Save it. Put your money into a savings account so it can grow. Traditional banks will pay you small interest rates to store your money. However, higher-yield online savings accounts can pay much more interest based on traditional brick & mortar banks. Discover is a good one that is well known.
Once you start the habit of saving money, it will get easier. When you see how making the small changes can add up to a nice savings account you will want to keep going. When you have reached your goal, or what you feel is a comfortable amount of savings for your lifestyle, the next step is to make your money work for you by investing.