Some may argue that savings accounts have lost their value because of the low interest rate that they offer. They would rather have their money elsewhere and see it grow faster. While investments in stocks or bonds might bring about higher yields, there is no doubt that savings accounts are very handy and have a value in a person’s financial future.
Why do you need a savings account?
1) It instills the discipline and habit of saving
2) To have an emergency fund that is more liquid than other forms of investments or accounts
3) To have a place to park your money while you are thinking where to invest it.
4) This could serve as a link to your checking account since checking accounts have lower interest rates.
5) To have an account to draw from money to pay bills and other expenses
6) To have an account to set aside money for long-term purchases like a car or a vacation
You have to choose a bank where you will open a savings account wisely. Some questions to ask are the following:
1) How much is the minimum balance to open an account? Are there penalties for falling below the minimum balance? How much is the penalty?
2) How much is the interest that you earn from your savings account?
3) Is there a limited number of transactions that is allowed to do with the account?
4) Can your salary be deposited directly into your savings account? (This has to be facilitated by your employer).
5) Will you be issued an ATM or a debit card? Are there fees for using this?
6) Will there be monthly statements delivered to your house?
Why is it important to have ready cash available?
1) Cash purchases sometimes offer discounts that your cannot get from buying with a credit card.
2) Smaller items like grocery purchases can be paid by cash so you don’t make it a habit to use a credit card.
3) With cash payments, you can easily balance how much money you have in your bank.
4) You won’t be borrowing if you have money saved up.
Even though savings accounts might not give the sophistication of other financial investments, it is a solid financial tool that will serve as the anchor for other important decisions.It is not a small feat to save money every month and the habit of saving is the foundation for future growth. Let your savings account come in handy in your day to day living and use it wisely.
For insights into the importance of having a savings account and why you should open one, visit savings account. Unique version for reprint here: The Importance of A Savings Account.