Having a savings account is a great way to manage your money. You have the opportunity to take advantage of valuable earning potential while keeping your funds safe. It is not a good idea to keep your money at home, where it can be stolen. Here are seven reasons why having a savings account is beneficial for you.
Money for Major Life Stage Goals
Saving money for specific goals in your life is beneficial for your financial security. Take retirement, for example, the sooner you start saving towards it, the better you prepare yourself for the retirement stage of life.
There may be other milestones in your life that will require significant financial backing, including college, marriage, buying a house, or starting a business.
You need money to fund those goals, and that is why it is beneficial to have a savings account.
There is no way of predicting the future and knowing when an emergency will occur. Hospitalization stemming from injuries or illness, for example, could result in expensive medical bills, which can cause your finances to take a hit.
An event that you have not planned for can cause considerable out-of-pocket costs, which you might feel tempted to cover with credit cards, but having a savings account can help to cover the gaps and prevent you from incurring unwanted debt.
Grow Your Savings
It is possible to put your money to work and watch your savings grow. Opening a high-interest savings account can help you to increase the money you already have.
With some financial institutions, interests can be compounded daily or monthly to help your savings grow, regardless of how much you have in the account.
The money you deposit in a savings account is protected by FDIC insurance secured by your bank.
If your bank runs into any financial troubles, such as bankruptcy, the insurance covers your accounts, dollar-for-dollar, including principal and any accrued interest up to a certain amount.
Having a savings account, you don’t have to worry about your money being lost, destroyed or stolen.
Protect Your Assets
If you are looking for another way to protect the assets that you have worked hard to accumulate, a savings account could do that for you.
Despite smaller returns on a savings account compared to other forms of investments, you don’t have to tie up all your funds in stocks, for example, which can fluctuate and cause you loss. A savings account can protect your investment from loss.
Leverage Business Opportunities
In many instances, taking advantage of an investment opportunity can come down to you, having a solid savings account with sufficient funds to present.
Managing a savings account could be beneficial when seeking credit with your bank by improving your odds. A robust savings account can assure your loan representative that you have the discipline needed to pay them back.
Your Savings Will Be There When You Need It
Your savings account will have terms that you need to understand, but generally speaking, you have easy access to your money.
You can make a withdrawal whenever you desire. Keep in mind that there will be limitations on the maximum number of withdrawals that you can make from your savings account without a monthly fee.
Putting your money away in a box in your closet at home is not a good idea. You eliminate the chance of it being stolen by putting your money in a savings account.
There it can grow, be safe, provide you with leverage to pursue business opportunities, and will be right there when you need it the most.