Building a Stable Savings Account
You don’t necessarily need thousands of dollars to create your own personal safety net.
Most of us wish we could save more money, but it’s still true that a little bit of saving goes a long way. The good news is that it doesn’t necessarily take thousands of dollars to create your own personal safety net with your savings account.
A recent study by the Urban Institute, a nonprofit organization focused on elevating the debate on social and economic policy, discovered that families with as little as $250 to $749 in savings are less likely to be evicted or miss a housing or utility payment.
Even if you’re middle class or wealthier, you shouldn’t overlook your savings account. Families who fall into these higher brackets are not immune to income disruptions and rough patches.
The study also states that higher savings levels are associated with even lower hardship, regardless of income level. That means that low-income families that have savings of $2,000 to $4,999 are considered more financially resilient than middle-income families with no savings. If you’re able to afford it, think about how much you and your family could potentially benefit from having a savings account.
So, how can you make sure your savings account is stable?
First, make your payments into your savings account automatic. Set aside a small amount each month personally, have your payroll distributed between both your checking and savings accounts, or set up your checking account to deposit a specific amount into your savings account each month.
Second, take on a part-time job if you can. By picking up a second job, you can devote all the extra funds directly into your savings account while still having your normal income for typical living expenses. Don’t have time for a second job? A garage sale is an easy way to earn a few bucks while cleaning out your closet, or consider selling on eBay, Craigslist, or letgo.
Third, save beyond your savings account. After getting the hang of saving money here and there, translate those good habits into other saving opportunities. Think retirement fund or a college account. If you have the means, find other things that you’d like to save money for and do it.
Fourth, make some sacrifices. If you find yourself unable to put away any money, or you would rather spend your hard-earned cash on something else, think about what you could possibly cut from your budget. This might mean not going out to eat with friends as often or not pampering yourself in the spa each week. Whatever it is, cut something from your routine that you can live without—it will be more than worth it in the end.
If your family becomes economically secure, you will be better able to weather a financial storm or temporary income drop. If something were to go wrong with your finances, you’ll have that savings account or emergency fund to make sure you and your loved ones don’t have to stress and worry.