Creating a plan to reach your financial goals is important in today’s unpredictable economic climate. The last two years have taught us to expect the unexpected. A savings account is a way to take some of your everyday spending money and put it away to earn interest while:
- Creating an emergency fund
- Helping curb impulse spending
- Avoiding debt
- Saving for a future expenditure
As interest rates climb, impacting borrowing power and credit card debt, a savings account will safeguard your money and be a source of cash should an unexpected life event occur. It also serves to finance discretionary spending like vacations and other large purchases, as well as help fund retirement. Savings accounts are secure as they are insured for up to $250,000 per depositor1 by the NCUA (National Credit Union Administration, a U.S. Government Agency) and backed by the full faith and credit of the United States Government.
In this turbulent economy with talks of inflation and layoffs, the ideal goal is to have three (3) to nine (9) months’ worth of monthly expenses in your savings account. It may take time to achieve this benchmark, but institutions such as Credit Unions require minimum deposits, starting as low as $5, to get started. They often offer higher interest rates and lower fees than most commercial banks.
Because Credit Unions are smaller community-centered institutions, they are known to provide personalized customer service while offering their members the same transaction abilities as the larger banks. For example, Welcome Federal Credit Union (WFCU) provides access to over 30,000 surcharge-free ATMs nationwide, and Shared Branching allows Credit Union members to bank* in person all over the country. In-person banking includes:
- Making deposits
- Cashing checks
- Withdrawing funds
- Transferring monies from one account to another
- Obtaining balance inquiries
- Making loan payments and advances
How often you contribute and the amount you accumulate in your savings account depends on your lifestyle and personal circumstances. It is important to contribute regularly to your savings account as it provides a resource to pay for a planned or unplanned trip, a car repair, or even income in the event of a job loss.
Certificates of Deposit (CDs)are also an excellent way to save at even higher interest rates. The drawback, unlike savings accounts, is that CDs are for terms of twelve (12) months to sixty (60) months with no opportunity for withdrawal without a penalty. The cash in your savings account is readily accessible and available for withdrawal from any ATM or shared branch with no penalty (assuming you stay above the minimum opening balance). There are no penalties for closing a savings account at any time.
Life plans change. Protect yourself and your loved ones by opening a savings account and regularly making deposits. It will give you peace of mind to know you have a cushion should the unexpected happen. It’s a great way to earn a return on your money so that you have funds for that trip you’ve been looking forward to when the unexpected doesn’t happen.
*some fees may apply