Hopefully you are one of the lucky ones who had parents that taught them to be smart with their money. Many people that live with debt later in life have it because of reckless use of credit cards in their twenties. That debt can ruin your chances of buying a new car, purchasing a home, and it can even cause issues in relationships.
Smart money handling means only using credit cards when you pay pay them off immediately. It also means learning how to save money. Many Americans don’t even have a savings account. In fact, 26 percent of them don’t.
Why You Need A Savings Account
Savings accounts aren’t just for emergencies. They serve many purposes. One of which is allowing you to have a lump sum of money when there is something you want to buy or need a down payment for.
Your savings account is your key to purchasing your first new car or having the down payment to buy your first home. It could be your vacation money or even your honeymoon cash. Whatever it is, if you don’t start saving it how will you pay for these things, or will you miss out on the American dream of ever owning your own home.
Another reason for having a savings account is to have a safety net. According to sleekmoney.com, while jobless rates have stayed steady during the last year or so, they do fluctuate and you could end up being one of those unemployed people. Having an extra three months worth of bill money and food money put away can really help out when unemployment strikes.
You also need to make sure that you save for retirement. When you no longer need to work anymore, or can’t work anymore, you need to make sure that you can still live, and maybe even have a little fun with life.
How To Start Saving
If you’re ready to start putting some money away you may be unsure of just how to get started. Here are a few tips that may help you squirrel away that nest egg you’ve always been wishing for.
- Have money directly deposited into savings– whether you work something out with your employer to have part of your paycheck direct deposited into savings and the rest of it in your checking, or you set up a direct transfer with your bank to move a portion of your checking into savings every month, this is one easy way to make sure that you slowly build on your savings account.
- Go old school– save your money in a big glass jar, or a piggy bank if you want to be really retro. You can put in all of your change, ones, fives, and even tens. You can find many savings plans online where you put a certain amount away the first day, then double it the next day, and so on. Once your jar is full you can deposit the money into your savings account.
- Pick a savings account that gives you interest– Get money back on your savings by getting an interest baring account. The more you gave in your account and the longer you have it there, the more money you will earn for your future.
It’s never too early and it’s never too late to start thinking about your savings and your future. You never know when something major will happen in your life and you’ll need some extra cash, from a major illness to a baby on the way. Don’t let life catch you with no money or you’ll end up in debt forever.
Your savings may also be a great way to help you get a head start on paying off your college debt too, which is also going to hurt your credit rating in the future if you don’t work on getting it paid off.