The Importance of Starting a Savings Account

Financial advisors are always talking about the importance of savings, but this concept can seem so abstract when you have no opportunity to apply it to your personal financial situation. A savings account can be a great first step into setting up a security fund that you can draw from should you ever need a rainy day fund. It is also one small step toward planning for your future so you are able to progress through life with the level of comfort you were hoping for.

Starting Your Savings

A savings account is a great way to get started if you have not been saving previously. Unlike some other bank accounts, most basic savings accounts have very few restrictions on how and when you can access your money. So if you are still worried about having money available quickly for student loan bills you can set a little bit each month aside with the assurance that it will only take minutes to get it back if something comes up. Depending on the level of savings you are planning on working with there are limits to how much you must have in the account at all time, so be sure to check out these restrictions to avoid fees later.

In a savings account, your money is always insured. So if the market is going through a rough patch or the bank you invested with goes out of business you never need to worry about losing your savings, so long as you have less than $100,000 in any individual account. Many like to keep emergency money tucked away at home, but if someone were to break in and take it you would have no way of replacing it, making this method of saving a bit more risky than having your money in a savings account.

Depending on how seriously you want to invest your money, a savings account can help your money grow. If you want to attach your account to a mutual fund, bond or trust you can earn a great deal of interest by simply allowing your money to sit in the bank. There are fees for early withdrawal from these types of accounts, however, so be sure that you only set aside an amount of money you can afford to do without for the length of time required by your bank to reap the full benefits of your investment.

Above all, having a high level of savings will increase your credit score. The better your credit score, the easier it will be to get credit, better rates on mortgage payments and any other number of financial assets. If you are looking for an easy way to boost your credit rating, start setting aside money in a savings account so you have more assets to report. Your money cannot be taxed while it is being invested in a savings account so you do not have to worry about losing anything by saving.

The importance of starting a savings account would make itself known in any number of ways throughout your financial portfolio. It never hurts to have extra money on hand, whether you are setting up a rainy day fund for your child's next earache or getting a jump start on your retirement fund. There are any number of ways to save and reasons to do so, but a basic savings account can assist in getting the ball rolling so you can focus on the plans you will need the money for and not how you will pay for them.

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