There are several things that everyone should have in order to maintain financial security. And saving accounts are one of them. A savings account will help you feel more secure and less stressed about money in the event of an emergency.
And can also be used to help you grow your income over time through compound interest. Here are four saving accounts you should have to help you make your money work harder for you. You will be able to grow your income over time.
Keeping a few months of living expenses on hand is an important first step towards financial stability. It’s also a good buffer between you and life’s big surprises: like car repairs, home maintenance, and medical bills.
Be sure to put enough cash away so that if you were laid off from work today, you could survive until you found another job. Also not have to borrow money from family or friends just for daily expenses.
A six-month cushion would be ideal, but three months of savings will work as well if that’s all you can manage.
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2) Retirement Fund
Having a retirement fund is one of those things that all financially savvy people strive for. The most common mistake people make with their retirement fund is contributing too little and/or not increasing their contributions as they get older.
If you don’t start making bigger contributions sooner rather than later. This can lead to huge gaps in your savings and many years with lower earnings. If you’re not sure how much money you should be putting into your retirement fund, check out The Simple Dollar’s Retirement Calculator.
It’ll tell you exactly how much money you should be saving based on your current income, expenses, goals, and age.
3) Fun Fund
This account is meant for fun, and will help keep you from spending your money on anything but yourself. To make sure you don’t overspend from your Fun Fund, make a list of all your upcoming expenses before moving money into it.
This way, you can plan how much money to move from each of your other accounts. Once a bill is paid out of one account, you can simply move that amount into your Fun Fund—and then wait until next month when that bill comes up again before transferring it back into its proper place.
4) College Fund
It may seem hard to put money away for college when you’re already investing in savings accounts for other purposes. But if you’re having kids, it’s time to think about how much you might need—and plan for it. Most experts recommend saving at least $300 per month (or $3,600 per year) into a child’s college fund. While he or she is young; that will give you over $80,000 by age 18.
And even if your kid gets scholarships and needs less than you’ve set aside, what goes into an account like this can be used for other educational expenses like graduate school.
And don’t forget: When your child starts earning his or her own income, one of your family’s main financial goals should be to help him or she save enough to pay tuition outright (to avoid taking on student loans). That means continuing to save even after he or she graduates from high school.
We all want to grow our money. The best way is with saving accounts that support you in meeting your financial goals. That’s why you should consider having multiple savings accounts. It might seem like an unnecessary hassle, but it’s actually a great way to plan for your future and ensure that you have everything you need at all times. Don’t forget about these four saving accounts so that you can start growing your income now!