There are not many households across the US that aren’t feeling the pinch in one way or another but with such volatility in the economy, it is more important than ever to have some dollars in the bank in case the worst should happen.
Unfortunately, too many people rely on credit cards to get them out of a financial hole if an emergency arises. Whilst this is OK as a short-term solution, credit cards are not the answer if there is a bigger problem, such as losing your job.
It is recommended that everyone should try to build up a nest-egg equivalent to 3-6 months worth of expenses and outgoings. The more dependents or debts such as credit cards you have, the higher the multiple should be.
However, with not much paycheck left at the end of the month, it can be difficult to find any spare cents to squirrel away and many keep hoping that credit cards will cover any problems.
But saving is like going to the dentist. You keep meaning to do it but never get round to it for one reason or another, so the only surefire way to get started is to just bite the bullet.
Waiting until the end of the month to see what is left over is one way to guarantee the savings account will never grow as there is always something that can gobble up the cash if you have it.
One of the best ways to save is to make sure you never have the money in your hands in the first place.
To do this, first of all you should work out how much you can afford to save comfortably each month. It doesn’t matter if this amount is small, as the main thing is to get started.
Once you have decided how much you can spare, arrange for the money to go straight from your paycheck into the savings account. This way, there can be no procrastination or delaying getting started. What you don’t have, you won’t miss.
Once money is regularly going into the savings account, it can be surprising to see how quickly it starts to accumulate and if you are managing without the cash, consider upping the amount. Even an extra $5 each month works out to an extra $60 saved per year.
Once a large lump sum has been saved up, it may be worth considering other ways to make your money work harder for you, but this will ultimately involve tying up the cash for a longer period of time.
Savings accounts which require notice before withdrawal will offer a higher rate of interest, whilst bonds are another option. Bonds are based on the financial market, but can provide a good return if the money is left invested.
Savings bonds are financially backed by the US government and offer different alternatives, depending on how long the money is planned to be left invested. Some types of bonds offer fixed rate returns, whereas longer-term bonds are purchased at less than face-value, meaning that over the years, the value can rise considerably.
For those prepared to risk losing their dollars, the stockmarket is another place where good returns can be earned. However, there is the risk that even with a well-informed investment, the value of the stocks can drop, so it is not an appropriate option for everyone.
Finally, there is also one little tip that everyone, no matter how young or old, how rich or poor can use to help boost their savings – the piggy-bank.
Having a jar where all loose change is emptied every day, or even where pocket money can be saved, can quietly start to stack up the dollars. One possible use for the piggy-bank cash is to pay for a little treat as a reward for saving money into the deposit account so diligently. After all, everyone deserves to splash out a little every now and then.