Tuesday, August 23, 2016
Why You Should Open a Savings Account
Money is Power or Cash is King still applies today. People feel powerless and helpless when they have little to no savings or retirement account, live paycheck to paycheck or experience a financial crisis. You feel more confidence, in control and powerful when you have a savings and/or retirement account - when you do not have to worry about how you will pay for car repairs or a broken furnace.
People who do not save feel a temporary sense of power when they buy something that they believe shows they are powerful such as a “BMW”, “going on vacation to a Caribbean island or buying a designer item such as Luis Vuitton. However, these feelings erode quickly when the credit card bill arrives – they go back to feeling powerless.
They also experience these feelings because they are treated differently by society. For example, someone living paycheck to paycheck may go to a liquor store or checking cashing store to cash his paycheck. However, if that same person went to a bank to deposit their paycheck they would have a different experience emotionally.
If two people went to a Friday’s restaurant and paid with a credit card, one paying with a MasterCard and another with an American Express Centurion Card, the Centurion card owner already feels more powerful due to how they are treated by society and previous experiences. The server may subconsciously or consciously treat the American Express Centurion Card owner differently because the credit card is a status symbol – a symbol of power. The MasterCard owner may not be treated the same because anyone with a certain credit score can be approved for a MasterCard but not everyone can be approved for an American Express Centurion Card.
The key to encouraging yourself or someone else to save is see how savings will benefit you not just in terms of retirement but real life examples of how it will benefit you. Some benefits of a savings account include compound interest, cash back rewards for some debit cards, emergency fund, provides additional payment options (cash, check, money order, cashier’s check, debit card) and to pay for unexpected expenses.
Nothing last forever and nothing stays the same forever. Life happens and things are constantly changing. Possessing a savings account will help you deal with changes in life much easier than applying for a payday loan or making other risky financial decisions because you do not have a savings account.
Set a savings goal, automate savings, look for high interest earning accounts and read your statement monthly to reconcile your savings account.