Savings accounts exist to help the average person save money. Typically, these accounts come with interest rates that help you earn more on your savings.
Unfortunately, savings accounts also get a bit of a bad rep. Many financial experts will indicate that you can find much better options when saving money. For example, investing your funds in assets can help you generate higher returns over a longer period.
With that in mind, is a savings account worth it? The short answer is yes, and these points explain why:
A savings account is simple
Having one of these accounts will make it very easy for you to save money. Simply set up a monthly standing order that takes money from your bank account and deposits it to your savings account. Just like that, you keep money safe in this account, stopping you from spending it.
There is no easier way of saving money - this requires no effort, you don’t have to constantly watch any markets, and you can sit back and watch your money pile up over time.
You have easy access to money
Unlike many other options, a traditional savings account gives you very easy access to your money. There’s no need to sell things to access cash - as there is with many investments. There are also no rules on what happens when you withdraw money - as there are with retirement savings accounts. You can simply withdraw as much money as you want, whenever you require it.
Furthermore, this prevents you from falling into debt in many situations. Let’s say there’s a storm that severely damages your house. You need money to fix your roof, but you don’t have enough. Consequently, you’re thinking of opening a line of credit by borrowing money in the form of a loan. In turn, you end up in debt.
With a savings account, you’ve basically got a nice little emergency fund to counter situations like this. Sure, you don’t earn massive interest on your savings, but at least you have instant access to money when you need it. Therefore, you can pay for roof repairs in the scenario above, avoiding the need to fall into debt.
Helps you budget
Budgeting is such a difficult task if you don’t have a savings account. With one, you can set yourself a goal for how much to save each month. As mentioned before, you simply take the money out of your main account and put it in savings.
From here, it is so much easier for you to create a budget. What’s left is the money you have until next month. So, you can see how much is there, how much can conceivably be spent on food, essentials, etc. All the while, you’re taking steps to reach your financial goals.
We have touched upon other ideas of saving money already in this post. However, a lot of the different methods present bigger risks. Investing in the stock market can generate massive returns that help you transform small savings into a lot of cash. At the same time, dips in the market and other economic factors can result in you losing lots of money from your investments.
Savings accounts are unique in that they are basically risk-free. The worst-case scenario is that interest rates drop to the point where they’re pointless and you aren’t gaining much extra. But, you still have a way of saving money - and you’re never at risk of losing any.
Your money is safe in a savings account, which also means it presents fewer risks that saving money in other ways. For instance, you keep money in jars or a piggy bank at home. Aside from not earning any interest, there’s always a risk that you could lose the money, or it gets stolen or damaged. Keeping funds in a savings account ensures they are locked away, and never put at risk!
It costs nothing to open a savings account - it is completely free!
There are also no additional fees for running your account and keeping it open. All you have to do is choose your savings account, and then put money in it.
In summary, savings accounts are definitely worth opening. They present an easy and risk-free way of saving money that can help you reach financial goals and budget more effectively. Other ways of saving exist - with more potential for greater earnings - but a good old fashioned savings account should never be overlooked.