What is a savings account? I’m sure you’ve heard one and even have one, but what are you using it for? The previous generations have taught to save our money for emergencies and life into a savings account, but that advice has long been in obsolete. Previous generations were pretty much married to their jobs and obeyed their managers every command. People back then would work for a company for 30 years, put money into a savings account and then happily retire living off company pension and their savings.
These days you can work for a company for 30 years and when you “retire” they’ll charge your for not returning your name tag. Many companies no longer pay lifetime pensions to their employees, and many people don’t last at a company long enough at a company to retire, so using a savings account for retirement is stupid. There are other accounts you can use to grow your money for retirement but a savings account is not one of them.
Years ago you can earn a dam good amount of money from letting your money sit in a high interest savings account, these days interest rates are about 1% so you’re not going to earn shit in a savings account. But enough bad mouthing savings accounts, these accounts should not be used for longterm savings. Savings accounts are for short term savings such as gifts, vacations, down payments, or for emergencies such as home or car repairs. One of the many many reasons this generation has trouble saving is because the perspective they have of their savings accounts.
Heres a tip for saving your first 100 dollars, it doesn’t seem like much and it shouldn’t, this is just your first step. You more than likely have a savings account, if you don’t go open one up, it’s easy. Before you transfer any money think about what your using the money for, is it for emergencies? Is someones birthday coming up? Is there anywhere you want to go? Or a down payment on a car? Whatever it is make it a note of it, it’s recommended you write it down the amount required, this will be your financial goal.
Now time to fund your savings account. If your comfortable with putting in 100 dollars today then do it, if you’re not so comfortable then wait until you get paid and transfer 50. If you get paid twice a month then do two transfers one on the 1st of the month and the other on the 15th. Boom you have 100 dollars in your savings account. Repeat this formula every month until you reach the amount desired, then when the time comes use that money for whatever it is you saved it for. When you do use feel proud and feel happy, you saved this money and made a purchase without any financial hardship, without worrying about any other expenses. Now you know how to save money and what a savings account SHOULD be used for.
– Sumit Singh Randhawa