Saving for Rainy Days
Ever heard the story about the ants and the grasshopper? While the ants were busy tucking foods away, the grasshopper was busy dancing and singing. When the snow came and the grasshopper could not find any food, the ants were very comfortable in their anthills and never went hungry because of the food they stored. Apply this to your daily life, and you will see the practicality of saving.
After you are done with your budgeting for the month, you must have some cash left that would go to your emergency fund. It is advised by most financial planners that you must have at least three to six months’ worth of cash saved up in a savings account.
The next step would be to go look for a bank where you can deposit your money. Because there are too many banks to choose from, it is important to know some information about them ahead of time. Also, most banks oblige the would-be customer to have a minimum deposit (amount depends on each bank) before you can open a savings account.
It is better to choose a back with a higher interest rate on their savings accounts. If you already have a savings account with a bank, find out if they have special interest rates on other services. Some banks with no physical branches offer higher interest rates because their expenses are much lower.
You also must take into consideration a bank’s fee. Usually, bigger banks charge you monthly when you utilize their online service for paying your monthly bills. Some banks offer this service for free. It is recommended that you find out about bank fees before you choose your bank.
If you are one of those people who travel a lot, you have to take into account how many ATM machines they have because sometimes they have ATM service fees. Why pay for such services when most of them are not in your location anyway? More popular banks have scattered ATM machines throughout the country. If you are also thinking of relocating to another area, bigger banks usually have more branches. You do not have to go look for another bank if you are changing state.
I have also taken the liberty to include some types of savings account before you choose a bank because more often than not you are going to be asked these questions.
If you do not plan on using your money for some time, you can choose to buy a CD or certificate of deposit. Let us say that you do choose this type of savings account. You can not withdraw your money for a specified length of time. This may be six months or more. With the bank knowing the length of time that you are not going to touch your money, they can utilize it and not worry about you withdrawing it. But take note, though this type of savings account offer a much higher interest, the penalty is usually stiffer if you withdraw your savings before the specified length of time.
Money market account is another type of savings account. It offers a higher interest rate than the regular savings account. You are also given the privilege to withdraw your money by writing checks. But this kind of savings account asks for a higher minimum deposit and only allows a limited number of checks each month.
With the information I gave you above, you now have the basic ideas in choosing a bank. You also know now the importance of saving and choosing the right bank to deposit your money into.
Article by Nakagava Ltd., creator of PiggyBob™, the first truly user friendly personal finance and appointment scheduling software. PiggyBob™ is an extremely convenient tool to help you keep track of your income and expenses, plus a very useful printable calendar to record all important events in your life.
