Do you realize, in the United States, the average car repair is $1,500? Did you know the average vet bill is around $400 for a cat? Are you aware that most human health care insurance plans cover only a fraction of any major medical expenses? Considering the uncertainty of today’s job market, we need to some money in saving for those unexpected expenses.
Just a couple years ago, in 2009, the average savings account would not even cover the bills for a family for one month. According to all the numbers I can find it is not much better today. It is time to get our financial house in order and have a healthy savings account.
Saving is more than just putting money in the bank. Savings is putting the right amount of money in the right bank. Why? Savings account are not designed to store money up for a rainy day. An expected return is required. Neither do we need to have our money in a bank getting a high interest rate when that same bank is charging us all sorts of fees.
The banks are feeling a needs to make more money. Banks like Wells Fargo, and Chase have started charging extra fees. This has been in the news lately. ABC Radio summed up those fees on the KBOI website. ABC Radio is reporting many banks are starting to take away things we have gotten use to as free, is no more. Things like free debit cards, and free checking. They, the banks are bringing back minimum balances, adding things like higher ATM fees, and even higher bounced check fees. Will this never end.
Putting money in a Mason jar and burying it in the backyard, is a waste. Putting money in a bank where they are going to charge to service fees is nothing more than us breaking even. In some cases we are losing ground just by banking with the wrong bank.
Finding the right bank and savings plan has, in my book, three little requirements.
- Money put in savings money grow a a fairly modest rate.
- Online banking must be full service
- Don’t charge me to use use my money
It may go unsaid, but I need to say it, right here. In the Great Recession so many people lost money by taking risk. Most of the money that was lost was from retirement account. It seemed no body set down and looked at the risk. The basic principle is, “The greater promise of return involves greater risk”.
Don’t be afraid, we need to start saving for all those rainy days. Things are outside of our normal needs like food, shelter, and transportation.
- Loss of income
- Start saving for your retirement
- Think about housing
- Think about housing kids’ college education
Way to save money are a dime a dozen. Yes, there is discipline required to get in the habit of saving and keep add it. For the average family, savings account is a must.
All saving accounts are not alike. Most banks have a basic short term saving plan that pays very low interest. Getting started with these type of saving plans can be started for $100 or less. Then there are long term saving plans that lock your money into the saving account for five years or more.
More on the different type of saving plans to come in future weeks.
