You might be thinking, “With all of the expenses and financial pressures of daily life these days, how can I afford to have a savings account?” However, with the risk of costly expenses raising their ugly head when you least expect them, how can you afford not to have a savings account?
It is always a good idea to make your savings grow so that if an emergency arises you will not have to rely on credit card debt to get through it. Experts say that you should have at least 3-6 months of savings to get you through an illness, loss of job, family emergency, or other disaster.
How to Make Your Savings Grow
Although saving up 3-6 months of income seems like a lot at the time, it can be easily achieved if you can build it up slowly over time.
The hardest thing about savings is having lots of money and resisting the urge to spend it. When you really want that holiday with your friends, those new clothes, or an upgrade to your mobile phone, you will have the money to do it right away and it will be hard to say no.
One way to avoid this temptation is to make your savings hard to access, which will make you think twice about using the money. Create a different bank account for your savings, preferably a high interest savings account. Make sure that you cannot access the account with your debit card, so that if you want to spend the money you actually have to go into your bank and withdraw it. You will be much less likely to use it for impulse purchases.
Choose a High Interest Account
The savings account that you choose can have a lot of impact on how much you save, because the higher the interest rate the more your money will grow. You will also want to find a savings account that allows you to access your money in case of an emergency. Take your time to compare the features of many different savings accounts at different banks until you find the one that suits you the best.
Always Pay Yourself
One of the best ways to grow your savings is to set up a bank transfer to automatically deposit a certain amount from your cheque account into your savings as soon as your weekly wages come in. If a chunk of money comes straight from your paycheque and into savings each week, you will be less tempted to touch the money because it will be like you never had it. You will get used to having a slightly smaller weekly paycheque and your savings account will slowly grow by a definite amount each week.
Deposit Any Windfalls
If you have received any money you weren’t expecting, such as a tax refund, birthday present, or prize money, don’t spend it right away. Put it into your savings, where it can grow and gather interest until you need to spend it on something important.
Once you get into the habit of saving, you can grow your savings account and have the security of knowing that you will always have enough money to cover any emergencies.