Having money in a high interest savings account is important and just about everyone can tell you that. Not everyone understands what they’re saving for. It’s easy to say the money is being saved for the future, or for emergencies, but if you really take the time to create a plan for the money you save – it will go much further toward bringing you financial security.
It’s important that you set goals for yourself and for your money. When you start looking for a bank for your savings, make sure you compare savings account rates to find the one that offers you the best interest rate possible. Once you find a good bank to save your money, you can begin considering the various savings goals you might have for your savings:
Emergencies – designating a portion of your savings towards any
unexpected emergency or expense is a great way to avoid using credit
cards or having to take out a loan or borrow money from a friend. Having money in an account designated for emergencies will give you a fund to draw funds required to pay for expenses and emergencies you didn’t expect. If you don’t need to use it, the money adds up nicely over time and will continue to earn interest even if you stop contributing to this particular savings fund.
Irregular expenses – while most expenses are paid on a monthly basis,
there are a number of expenses a family will pay that may be bi-monthly, quarterly, or annually. For example car insurance or homeowner’s insurance premiums are often paid in one lump sum, as are school or property taxes. If you aren’t saving throughout the year for these expenses, it can be extremely difficult to come up with the cash all at once by the time they are due. Make sure you plan for these expenses by calculating how much you would need to set aside on a monthly basis in order to pay the bill when it comes due.