Why 2nd Savings Account?
Tuesday, December 9th, 2008 Subscribe To Our Feed
It seems to me that the buzz words right now in the area of personal finance is security and stability, and it is right so. You see, there are just simply too many factors involved that can wipe out all your savings.
Being prepared financially is always at good idea because you can be ready for something unfortunate that could crop up. Note that anything could occur and your personal finance situation could be in trouble. You could get retrenched or end up having major medical expenses. Whatever it is, you have to be ready when things like that happen. You will have money when you need it without having to take a loan.
Here are some sound personal finance tips
Get a Plan
The best way to prepare for unexpected expenses is to have a plan. You have to work it into your budget now. You may have to make some changes to allow for that extra money. What you want is to prepare a second savings.
This second savings is mainly for emergency purposes only. Youu should plan for at least 3 months of your salary so that if you are into financial problems you can live without working for 3 months. Once you reach that goal you can start contributing to the main savings and let the second savings account sit and gain interest.
Never take any money out of this account and if you do, make it as a ‘loan’ from this account and be sure to ‘pay back’. It is important to never take money from the second savings unless absolutely necessary. You may even want to stipulate rules for the account so everyone knows when money may be removed.
One of the biggest mistakes with savings accounts is that people think they can repay the money and take money out with never actually repaying. Then when the money is really needed it isn’t there. Savings accounts are not meant to be spent, so do not use either savings account unless you must do so.
A Word About Saving
Many people fail to save at all. You probably have a savings account as part of your personal finances, but many people do not even have that. If something like a car repair were to pop up you could probably use money from the savings you have been building. Without savings, you may be in trouble.
Additionally, if you failed to save at all then you do not have the extra money and have to find a way to work the expense into your budget. That can be quite hard since most people have a tight budget with little extra cash on hand.
Getting yourself to save may be a challenge. Making excuses about why saving is impossible is common. The point is that you have to push excuses aside and realize the benefits of saving. No matter how little you may be able to contribute to a savings account, in the end it will add up.
Get Started
You will never be able to learn to save if you do not start. If you have one savings then start planning for a 2nd account and keep it as an emergency account. Have it included into your budget. Never look down on just couple of dollars savings per month, at least you will be started on the way and that is half the battle.
Just remember the benefits of having extra money saved back. No one wants to be hit with huge, sudden expenses so with a good savings you have the power to prevent that from happening just by creating a 2nd account today.
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