The idea of a savings account is almost so simple that it is easy to overlook the many available uses to improve your financial situation.
To begin, it is wise to define a savings account. A savings account is a type of personal deposit account designed to accrue money by making deposits and collecting interest on the balance. In many ways, a savings account acts just like a piggy bank. The benefit is that the savings account also adds an interest earning on top of your deposits, so you come out a little better than dropping your coins into that funky pink keepsake sitting on your dresser.
Savings Goals for a Savings Account
While many people consider a savings account a good place to store funds for a rainy day, having a specific, measurable goal will take the financial throttle to the next level. When matched with automation of weekly or monthly scheduled transfers, your goals are within reach.
So what sort of specific, measurable goals can be obtained with a savings account?
While the sky really is the limit with this one, here are some ideas to put your savings account to good use:
- Start an Emergency Fund. Remember that time when your car broke down on the way to work? Have you come home to a warm refrigerator or an icy cold living room? With only 41% of Americans able to cover a $1,000 unexpected expense, having an emergency fund of at least that amount can go a long way towards preventing the next mishap from being a budget-busting brick wall. Use your savings account to make sure that the next car repair or appliance failure doesn’t ruin your week. There is nothing like having that peaceful feeling, even when Murphy’s law strikes with a vengeance!
- Get Ready for Christmas. Dread the holiday season because you’re stuck running up credit card bills or having to compromise to get everyone on your list a gift? A savings account is a great way to pace yourself in the gift budget department. An easy way is to calculate what you’ll spend on that child, loved one, or friend and divide by 12. Instead of paying the credit card company interest, pay yourself, ahead of time. For example, if your list adds up to $300 in gifts in December, putting back $25/month looks much better than working next year to pay back the $300 plus interest. You may even get to enjoy things a little more this year rather than worrying about the bill.
- Give yourself an education. What can be a better investment than in yourself, right? A savings account is a way to put the money back for the expenses associated with obtaining your education and investing in your future. While there are other alternatives to a simple savings account for education, some situations may not be as favorable to these tools. (You should always consult your accountant or other financial professional for your specific situation.) A savings account allows you to save the money and otherwise remain flexible when plans change.
- Build up a down payment. Buying a new car or your next home are tremendous, life altering decisions that often require large down payments. Putting a little bit more down upfront can lead to significant savings down the line, particularly when talking about a 15 or 30 year mortgage. Wisely using a savings account to store your funds until the closing date will help put you ahead. If you’re storing up cash to get ready for a coming purchase, a savings account will give you a place to keep it and earn interest along the way.
- Save for the trip of a lifetime. Who doesn’t want to dig their toes into some warm sand while they gaze out into crystal clear water? For those of you who even prefer icy cruises in Alaska or mountain treks in the crisp, cold late fall, the principle is the same. Using a savings account to divide that travel bill up can save more than a little bit of interest. Save up for a bigger, better trip or get started a couple years ahead of schedule for that anniversary trip of a lifetime!
The bottom line is that the sky is really the limit when it comes to savings accounts. While that is a little bit cliche, the truth of the matter is that if you can calculate an amount, you can then divide that amount by a specific timeline and you’ve all but established your savings goal. Committing money using a plan, bolstered by helpful tools like scheduled transfers and a mobile app for keeping up with it all makes saving money a breeze.
Visit your local First Palmetto Bank branch today to get started on your savings goal with a new savings account!