A Savings Account Can Save You Money and Worries
When most people think of savings accounts, they immediately think of these as being the poorest of all investments. And while they may be correct in terms of the lower interest rates offered, they are not considering all of the benefits of investing money into a regular savings account. Here are a few of the benefits that most people fail to consider.
1. Gain Peace of Mind
The savings account interest rate might be low, but where else can you store money where the safety of your money is guaranteed and insured? Having your funds federally insured against loss can give you peace of mind that you can't get from potential high yield investments that come with the constant fear of losing your principal.
2. Save Money By Becoming Your Own Banker
If you faithfully and continually contribute money to a savings account, over time you will be able to borrow money from yourself when you need it instead of paying interest on a bank loan, or worse, paying the outrageously high interest on a credit card balance. Becoming your own bank can save you thousands of dollars in interest charges over the course of your lifetime.
3. Save Money By Becoming Your Own Insurance Company
If you faithfully and continually contribute money to a savings account, over time, you will be able to increase the deductibles on your insurance policies (self-insurance against modest losses). This has the potential to save you thousands of dollars in auto, home, disability, and health insurance premiums over the course of your lifetime.
4. No Penalties or Fees for Spending Your Own Money
Unlike most other types of investments, regular saving accounts don't come with early withdrawal penalties. If unforeseen events force you to withdraw your funds from a safe, high yield investment that penalizes you for early withdrawal, you can end up earning less than what you could have earned on a regular savings account.
A Savings Account Is Not A Spending Account
All too often I witness people confusing a savings account with being a spending account. They put money in their savings only to drain the account before their deposits have any time to earn any interest at all. This is a very costly habit in terms of your financial future.
A savings account is for saving money for the long term. So the only way to gain the value of a savings account is to NOT get into the habit of spending from it. Once you get into the habit of spending from your savings account, it will be tough to break. Therefore, if you think you might need the funds anytime soon (less than 5-years), I encourage to deposit the money into a checking account instead. "Save" your saving accounts for saving.
Are You Using A Motor Home For Everyday Transportation?
Please be aware that complaining about low savings account interest rates while paying 18% on credit card debt is like complaining about gas prices while using a motor home for everyday transportation. If you really want to do something about low savings rates and high borrowing rates, stop borrowing, and start saving!