We’ve covered the importance of putting something aside in a savings account more than a few times and for more than a few reasons. We’ll go over them one at a time here and hopefully you’ll be inspirted to get started and open an account today to begin building a nice, solid savings account. There are always little tips and tricks you can use to not only start saving today, but also keeping track of your savings and making sure you find the best ways to save and build your various portfolios and accounts.
You definitely want to have some emergency funds put aside to handle those unforeseen problems that always seem to pop up now and again, that’s a given. It’s also important to make sure your extra money isn’t just sitting around in a checking account when it could be earning some interest. An online savings account is also a good place you can automatically have a portion, say 10-15%, of your paycheck deducted each and every month. Don’t wait to see what’s left over after your bills are paid and the fun-money is gone; instead, get it right into your savings account before you even begin to work on your budget. There are some good resources about saving money at America Saves.
Consider your first priority in building a savings account to be having enough funds to cover yourself in case of an emergency. Initially, you want to have money set aside to handle any large repairs that come along such as some work to get your car running again or fixing or replacing a major appliance in your home. After you have this amount covered, you can begin building your balance to cover more long-term problems that you might incur. A good rule-of-thumb is to have the equivalent of three to six months salary set aside in case you lose your job or become injured and can’t work. Ideally, especially considering the uncertain times we face today, you should probably have about eight months or even a years worth of living expenses set aside to handle an extended problem.
This brings up the point about whether you should pay off your debt first or start putting money aside right away. The answer is difficult to say since it depends on your particular situation. More than likely, you should always work on getting rid of your high-interest debt first. However, it’s not a bad idea to start a savings account anyway and get into a habit of automatically putting money in every month.
After you’ve worked down the balances of your debt, you can bump up the amount you save every month. Eventually, you’ll simply make saving a part of your monthly routine and before you know it, you’ll have a nice little account to give you the piece of mind to know you can cover yourself and your family when the money is needed.