Did you know that 56% of Americans can’t cover an unexpected $1,000 bill with their savings?
This means they are only one minor emergency away from being in financial trouble. They can’t afford to buy a new car, repair their plumbing, or even pay for a doctor’s visit.
That’s why starting a savings account is so important. It can help you build up your emergency fund and save for big purchases like furniture or a new car. Saving money starts with understanding the right way to do it.
Here are some tips on how to get started with your own savings account.
Know What You’re Saving for
Before you start saving money, figure out what you are saving for so that you can set up goals and track your progress.
This will also help keep you motivated in your efforts to save money. You should have at least three goals in mind when starting a savings account: one short-term goal, two mid-term goals, and one long-term goal.
The short-term goal should be something that you can achieve within a year. The mid-term goals are things like paying off your student loans. Finally, the long-term goal is usually associated with retirement savings accounts.
If you need help defining your goals, fill out the WealthAbility evaluator.
Open an Account at an Institution You Trust
If you have an existing checking account at a bank or credit union that you trust, it’s probably best to open your new savings account there as well. If you don’t have one yet, shop around until you find an institution that provides the services you need at a reasonable price.
Make sure you understand the terms of the account and what fees are associated with it. Look for a low minimum balance requirement, interest-bearing savings accounts, and free online banking access.
Set Up Direct Deposit
If you plan on making regular deposits into your savings account, then the direct deposit may be best for you. This way, your money gets deposited automatically with no effort on your part. This makes saving easier than ever before.
You can set up direct deposit through your bank’s website or over the phone. If you already have an account with them, then it will only take a few minutes to get started.
You’ll need to provide some information about your employers, such as their names and address.
Don’t Touch Your Savings Account
Don’t touch the money in your savings account unless absolutely necessary. This is the most important part of saving.
If you’re tempted to spend your savings, resist the urge as best you can. Keep in mind that money saved is effectively earning interest while it sits in your account, so don’t touch it unless absolutely necessary.
Starting a Savings Account: Give Yourself Financial Security
Starting a savings account can be a daunting task, especially for those with limited savings. Fortunately, it doesn’t have to be that way. With some diligence and patience, you can create the savings account of your dreams in no time flat.
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