Putting a tidy sum away for a rainy day is crucial to securing a stable financial position. Even if you have a roster of investments offering you envious rates of return, it’s still good practice to squirrel away some cash to have some liquid assets on hand. Having a sizeable checking account allows you to take care of everyday expenses while having a backup in case of emergencies, ensuring that you cover all bases.
Even though savings accounts are essential to carrying out a sound financial plan, many people fail to see its importance. Without a savings account, you can find yourself in deep trouble, in which being liquid is the only way to bail yourself out. Here are five reasons you need a savings account:
- It Protects You From Losing Money
Regularly depositing money in a savings account can protect you in case the bank closes, even when they’re the ones keeping your money safe. The Federal Deposit Insurance Corporation insures up to $250,000 in your savings account, which means you’ll never lose money on deposits insured by the FDIC. That way, you can continue depositing money into your savings account while enjoying its interest rates, helping you slowly earn more funds along the way.
- It Provides Easy Access to Cash
Another benefit to having a savings account is that it’s easy for you to access your money. You can easily withdraw or transfer money from your savings account using the bank’s app on your phone. Some banks offer other accessibility features as well with your ATM card. When you’re in a pinch or need a few extra bucks to pay for parking, having a savings account can sweep in to save the day.
- It Prepares You for Emergencies
While it’s impossible to predict emergencies and completely prevent them from happening, the next best step to take is to prepare yourself adequately. Whether it is getting into an accident to losing your job, these urgent situations are significant stressors on your financial status. However, you can ease the burden by having several months’ worth of savings that can take care of your living expenses in the meantime. That way, you won’t be compromising your health to get back on your feet and make money before you’re ready.
- It Helps You Purchase Big-Ticket Items
If you are opposed to purchasing expensive items on your credit card to avoid going into debt, then having a savings account can help you pay such purchases. Saving a fixed amount every month and putting it into your savings account will eventually give you the amount you need to pay for the item in full. At the same time, you won’t risk taking on a debt that’s too big and expensive to pay back on time. Whether it’s a new laptop or a new TV, a savings account can help you buy what you need without taking a loan.
- It Funds Unexpected Expenses
It’s difficult to predict when your stove will suddenly stop working or your car will break down on the way home. Without a savings account, it’ll be tough to take care of these issues, leaving you without these essentials for an indefinite time. Such unexpected expenses can often reset your journey towards a financial milestone because it essentially throws a wrench into your financial plan. However, with a savings account, you can cover these without breaking a sweat.
Setting aside money to put into a savings account will encourage sound financial habits, setting you up for financial stability and security. You’ll also become more money-wise later on, helping you budget and spend only when necessary. By having a savings account, you can afford the life you want—and all that it throws at you—without going into debt. If you’re looking for the best savings account interest rates, be sure to ask us at Good Neighbors Credit Unit! We are a credit union that can help you with your financial needs, from looking for an ATM to applying for a loan. If you’d like to know more about what we do, check out our new member sign-ups today!