Savings account: Do you need one?

Do you have a savings account? If your answer is no, consider creating a savings account to use for emergencies. You will not regret it!

Creating a savings account is a necessity. It does not matter whether you make a little or a lot of money; everyone needs a savings account.

Opening a savings account can be beneficial. It can cover unexpected expenses that might occur as a financial hit.

When there is no savings, an individual is subjected to borrowing money and paying high interest. The interest you pay could be money you save.

It will take time, dedication and discipline to build a savings account. This means you have to focus on depositing money into the savings account rather than making unnecessary withdrawals.

For your money to grow, you must make consistent deposits into the account. Remember, time plus consistency equals growth.

Having a savings account might be the most important difference between those who manage to stay above water and those who are drowning financially. Preserving a savings – as little as $500 – allows you to meet unexpected financial challenges, such as: paying for a prescription or co-payment, replacing a car battery or fixing a plumbing problem.

Saving can be a challenge in today’s economy because of COVID-19.

Some people are out of work because of company closures. Others’ work hours have been reduced. Many are being retrained for a new job all together.

If you have financial barriers that are keeping you from saving, start small by saving loose change. Then work your way to saving 1 percent of your paycheck until you reach saving 10 percent from your paycheck.

Find out what type of employer-sponsored retirement savings plans are available for you. If there is a matching retirement program, participate. This is free additional money.

You might need at least $100 to open a savings account, but some banks and credit unions might have special programs for youth and senior citizens that require less. Make sure you know if there is a minimum balance to avoid monthly fees.

Banks and credit unions might waive the minimums if you have other accounts at that institution. This also will help you to save money by not paying those fees.

Saving money can be a project for the entire family. Challenge your children to save for the next item they want you to purchase. You will be amazed!

Patricia W. Smith works with Alabama Cooperative Extension System serving northwest Alabama as a regional agent in financial resource management and workforce development. She can be reached at 256-710-7702 or smithp7@auburn.edu, or learn more at www.aces.edu.