You’ve heard that one of the best ways to manage your finances is to open a savings account. Today, so many financial institutions have general savings accounts that make for good options. You don’t have to carry a minimum balance, and it’s easy to get your money when you need it. If you aren’t sure why you need a savings account, read the five reasons below.
1. Emergency Fund
A savings account is a great place to put any extra money you have away and use when you need it. There are so many expenses that you can get unexpected, and having that extra place with money will keep you from having to use other ways to pay those expenses. A savings account that you can access will keep you from accumulating credit card debt, taking out personal loans, and having to pay unnecessary interest. In the event that you lose your job, you’ll also have some money to cover your expenses until you can get another job. In fact, 34% of burglars get through the home through the front door. It’s a good idea to have at least six months’ worth of expenses saved in the savings account for emergencies.
2. Car Maintenance
If you own one or two vehicles, you’ll need maintenance expenses. It doesn’t matter how new they are, and if you have older vehicles that no longer have a car payment, you’ll see this pretty soon. Natural wear and tear happens on vehicles, especially for folks who put more than 15,000 miles on a vehicle each year. According to Globe Newswire, the global automotive maintenance and repair market is expected to reach $1237.49 billion in 2026. When these expenses arise, you’ll need money to cover them, and maybe even some extra for a car rental if the shop is going to have your car for a few days.
3. Future Expenses
If you’re considering having children in the future, you’ll want to make sure you put some money back for childcare expenses. Working and getting daycare is a requirement for almost all families at this point, and with the daycare costs steadily rising, you need to be prepared. You want your child to have the best care while you’re working, as this is an investment in their growth. About 25% to 50% of kids require orthodontics and that’s another expense you’ll want to prepare for.
4. Low-Risk
Savings accounts are small risks because they don’t require a lot of money to invest and they are easy to open. Also, you can expect that up to $100,000 to be FDIC insured, even if your bank account is hacked and the accounts were stolen. This makes it a great option to have money sitting in these accounts and getting what you need squared away. If you decide you want a separate savings account, you can even do that, so that you’re putting certain funds with certain goals in each account and not mixing them.
5. Small Interest Returns
Most general savings accounts come with small interest returns. Some of the current rates are around 4%, so if you want to get a little money back for storing your money in this account, you should consider doing this and opening an account. When you’re first adding money, you won’t see a lot of interest added to the account, but as the amount starts to grow, so will the monthly interest that’s deposited right back into the account.
Even if you don’t think you have a lot of money to put into a savings account, you should consider opening one up. Most banks don’t require a minimum balance, and you’ll have a secure place to store extra funds if you need to later on. Start browsing with your local bank or online options to open a savings account at this time.