The feasibility of keeping money at savings account: nowadays storing money at home or in the office is associated with potential risk of getting robbed. Besides keeping cash under such conditions is not financially feasible, since you do not earn any interest on it; therefore it would be illogical to keep it in the shoebox or under the mattress.
Savings account provides some benefits that many people around the world consider to be highly valuable.
First of all while keeping money at savings account, it will be less likely that you will spend it; therefore savings account helps you to do what it is designed for: to help you to save.
Secondly, high interest savings account is highly secure, since money deposited to such accounts is insured (up to $250,000) by Federal Deposit Insurance Commission. It is noteworthy that a bank providing savings account must be member of FDIC.
Thirdly, you receive interest income on your account. Interest rates change from bank to bank, but it is always possible 
to find a bank offering favorable interest rate. So savings account allows you not only save, but also earn money on your savings especially if a banking institution uses compounded interest rate.
Earning interest on your savings is extremely important, because inflation over time diminishes purchasing power of your money holdings. This negative effect of inflation is offset by interest income generated from savings account. Otherwise you would be able to buy fewer goods and services with your money tomorrow, than you can buy today.
Starting saving effectively needs certain type of approach. A good approach would be if you started “paying yourself first”. By this we mean that as you get your salary you should transfer funds to you savings account before covering other expenses or spending money for entertainment. Of course you must make sure that you have enough funds to pay your bills, for entertainment and for having fun. It makes saving much easier, because you make prediction (build up a budget for the coming period) about your spending for the coming period, but the money aside and the rest transfer to savings account. In this way you have better chances to overcome the temptation of spending money. Saving may solve many of your problems. You may even fund large part of your expenses by interest income.
Like this post? Post Comment, Download and Subscribe RSS