Tuesday, October 29, 2019

3 Financial Habits That Set You Up for Success

It is incredible to consider how many people either do not have a savings account or do not use one. It seems that most people rely solely on their checking accounts. There are many reasons why this is a bad idea. Savings accounts are designed to help you better manage your finances. 

They also end up paying much more interest, on average, than checking accounts do. When you have money that you do not need to spend right away, it is typically better to sock it away in your savings than it is to put it in your checking account where you might be tempted to spend it. Here are three reasons why you should always deposit money into your savings account.

Emergencies Are Always A Possibility

While things might be going great today, there is always the possibility of an emergency on the horizon. When you need money in a hurry, it is much better to use the cash in a savings account than it is to borrow the money. 

When you have a savings account that contains money for a rainy day, you will never have to worry about how you are going to account for an emergency ever again. This is a great, liberating feeling to have.

If you can, open a Health Savings Account. Having a pre-tax HSA will allow you to have a savings account that can only be used for medical visits and supplies. This will keep temptation out of dipping into the savings account for other uses. It will also help ease any feeling of financial guilt that comes with human nature when you go to the doctor. 

This way, you know the co-pay is not coming from your checking account, and you can worry about getting your family medical care without worrying about the financial aspect. Many employers will do an HSA match amount that can become a very valuable benefit.

Save for A Long Term Goal

If you want to do something in the future, it helps to begin saving for it today. Perhaps you want to take a cruise for your 25th wedding anniversary. Begin saving now and earmark it for that trip. Then, you will have the money when the times come to take a trip of a lifetime.

Financial success comes in many forms. Investing your savings in a way that you can multiply your money. There are success stories of ordinary families that learned how to get rich in the military, for example. Saving $500 a paycheck when you get a new job or raise can lead to $12,000 in yearly savings. This is a way you can get out of debt instead of increasing your spending habits. That home deposit, the new business idea doesn’t seem so out of the ordinary anymore.

Get Ready for A House Deposit

You might not be ready with the money today to buy a house, but you hope to at some point. Real estate is a great investment. However, you will need a deposit to put down on a new home to qualify for a great rate on your mortgage. The more money you can save towards this deposit, the lower your monthly payments will be in the end. You will also reduce the amount you pay towards interest over the term of the loan.

If you can buy it, then buy a home. Getting in the habit of looking ahead is something you can do even if you are stuck renting at the moment. Talk to a real estate agent, a loan officer before you are ready. Get in the habit of knowing where you want to go and what work you need to do to get there. Nothing will magically appear on your lap. Plan for success.

These are just three of the many functions of a savings account. This allows you to have a focused means of saving money that you will need at some point in the future. It helps to minimize the temptation of spending money today that you really need for the future. The way to best accomplish this is to make regular deposits into your savings account so that money will be there when you need it.

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