Tuesday, February 03, 2015

Why You Need to Save


Are you saver? Don’t feel bad. Many Americans today don't have a savings account. According to the National Institute of Retirement Security 84% of Americans are falling short of "reasonable" retirement savings targets. According to a study by Bankrate one third of Americans have nothing saved for retirement.

Life is unexpected and anything can happen at any time so it is best to be prepared. This is why you should contribute to a savings account. Your savings account is your safety net in case you get sick, lose your job, a loved one dies or you need to pay for unexpected expenses.

You should have enough in your savings account to pay your bills and monthly expenses for at least 9 to 12 months. Money should be readily accessible and stored in a checking or savings account, preferably a high interest online  savings account such as Ally Bank, Emigrant Direct or ING or a money market account.

You can start by contributing small amounts until you are able to contribute more even if it is just $5 a week. Contribute on a regular basis. Once you are able to contribute more do so. Make several short-term goals.

Once you have reached your first goal start developing some long-term goals such as planning for retirement or paying for your children’s college education. A great site to learn about saving is americasaves.org.

A savings account will ensure that you are on the road to becoming financially secure. A savings account reduces your chances of getting into debt, provides peace of mind and provides financial security. You may not know what the future holds but if you prepare your finances now, it will ease the burden of what tomorrow holds. Here are 11 tips to help your start a savings account.

  1. Reduce monthly spending by 30-50%.
  2. Downgrade or downsize your lifestyle such as buying a smaller home or trading in your car for a cheaper car.
  3. Save a minimum of 10% for every dollar earned or received.
  4. Put change in a jar every 3 months and deposit the money into a savings account.
  5. Use automatic deduction.
  6. Use bank programs such as Wells Fargo Way 2 Save Program or Bank of America Keep the Change.
  7. Determine what you need ahead of time and save money to pay for it instead of using credit cards or risky financial products such as Payday loans.
  8. Shop around with various banks to find a checking account with no monthly fees.
  9. Use direct deposit to send your paycheck directly to your bank.
  10. If you get a raise, save most of the money received from the raise or use a portion of it to contribute to a savings account.
  11. Use your tax refund to pay down debt, contribute to a savings account or retirement account.

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