Why Have a Savings Account
Sometimes savings can be annoying. You may wonder why even have a savings account when there are things you want to buy now. However, there are numerous reasons to save your money. Everyone has a different reason, but typically a savings account is meant to better support you in any type of hard times in the future. It can also take care of goals like getting a new car, going on vacation, etc. Some reasons you should save money are:
Reason #1: Have a Cushion in Emergencies
When hard times hit, they can take a devastating toll on your finances. Unexpected events like injury, job loss, car damage, etc., can all have hefty price tags associated with them. A failure to pay these fees can sometimes lead to repercussions with collection agencies, which can ultimately hurt your credit. The ideal goal of an emergency fund is to have around six months of expenses covered completely. That includes all bills from rent, to car insurance, to groceries, etc.
Reason #2: Save for Future Goals
These goals can include retirement, buying a home, a college education, and more. If you were to begin saving for a retirement plan, then you would need to look for special accounts like a 401(k) account. These are special accounts that help build interest on the money you put in so that you end up making money for your retirement. You may even have the option to open one of these accounts with your employer.
If you want to someday buy a home, then you can save for your down payment. The more money you have saved for your down payment, then the better interest rates you will receive on your mortgage. If you save 20% of the home’s purchase price for your down payment, then you may even be able to avoid private mortgage insurance as well.
If you want to attend college then having a savings fund for education is a great tool. You can put funds aside to cover the costs of tuition as well as avoid higher interest rates if you take out a private loan.
Reason #3: Save for Big Purchases
This is a great place to start building your life wish list. If you have always wanted to travel to Italy, then you can save up for that trip. If you have always wanted a specific car then to save up for a down payment on that car. You can set life goals for yourself and this saved money can go towards achieving those dreams!
Reason #4: Save for Holidays and Birthdays
Avoid stressing about purchases for special holidays and birthdays with this savings fund. You can set aside money a little bit throughout the year so then when these special occasions come up, you don’t feel the financial impact as much.
There are many reasons as to why you should have a savings account. Think about what some important goals are that you want to achieve, and think about what you need to secure during hard times. This will help remind you of why you should continue to save!