Around 62% of Americans have less than $1,000 dollars in their savings accounts according to a Google survey that was done last year. 21% of Americans don’t even have one. In this article we will look at 10 reasons why everybody should have (and use!) a savings account.
1. The Unknowns
This most important reason you should have a savings account is because of the “unknowns” of life. Your car’s water pump goes out suddenly, and you don’t have the funds to repair it. Now you don’t have any way to get to work. If you had enough money in your savings account you could take it to a repair shop and get it repaired.
You could also have a home appliance failure. It could be the washer, dryer, refrigerator, you name it. If you have the money put back you can get the repairs done immediately rather than having to wait for the next paycheck to come in.
2. It Builds Interest
The money in your savings account builds interest. Guess what? That means that you will receive extra money just for having your money in the bank! You probably won’t gain much from this interest (the average rate in April of this year was 0.06%), but remember that every penny adds up.
3. Big-Ticket Purchases
Sorry to break it to you, but eventually you are going to need to buy another car. Your current one will break down at some point. You can save a considerable amount of money if you buy your car outright instead of buying it on a loan and paying interest. Putting back money regularly into your savings account will allow you to do this.
Having money in a savings account will help you to feel more financially secure. This is especially true if you live from paycheck to paycheck. You don’t need the stress of the “unknowns” that were mentioned earlier hanging over you nonstop.
5. Overdraft Protection
This one is almost as important as the “unknowns.” Some banks allow you to use your savings account instead of overdrafting your checking and charging you a fee. This is especially important to set up if you keep a low balance in your checking and you have automatic recurring bill payments set up.