Saving money for future emergency needs is one of the leading ways to support a good credit score. It helps to have money set aside so credit cards do not have to max out during a financial crunch. When credit cards are full many people will turn to online payday loans in order to get through the crisis. If there was a savings account, there would be no reason to turn to third party money to support the cost. Too bad saving money is not an easier task.
One of the difficult parts to saving money is keeping it there. People who live paycheck to paycheck usually fall to credit cards and payday lenders when extra costs pop up, if there was a savings accounts, it wouldn’t last long. In fact, these folks would have to work hard to get the money together to build one in the first place. It’s not easily done, but it is doable.
One of the biggest misconceptions is that you have to have to set aside a portion of your income in your budget in order to save. This would be a best scenario but when it comes to savings accounts, there is no rule of thumb. Even if you can only afford $5 a month, it’s better than nothing. The hard part is to not get frustrated and never even place the small amount in. Another tricky part of savings accounts is leaving the money there until you absolutely need it. It’s an emergency account, not a hit up the latest sale account.
Some people have a hard time leaving money there when they can get at it easily when they want something. Online banking makes transfers from one account to another very simple and fast. It is important to train yourself to leave that money there unless you absolutely need it. If you tend to use credit cards and fast payday loan lenders when times are tough, it may help to have two separate savings accounts. Open one account for long-term saving goals and a second for emergency money matters. The sooner you start saving the faster you will have free money options to turn to. Many banks will set up automatic transfers from your checking to savings. This option works great for those who forget or tend to spend the money elsewhere. Automatic transfers will also help to omit some bank management fees.
Direct deposit options give a person the choice to send money directly from their paycheck into multiple accounts. It helps for those who have a hard time parting with the money once it is in their checking account. Money that goes directly into the savings account won’t get used accidentally. You can formulate your budget around the amount of money that does go into your expense account. If you don’t see it you won’t miss it.
Living paycheck to paycheck is tough when emergencies come around. It is important to take advantage of the calm time and stash money away for future needs. The car breaking down or an emergency trip to the doctor with medicine are just a few examples of money needs that must be paid quickly. If you are going to use third party money, make sure you are getting it paid off as soon as possible so there is no extra interest payments eating at your income. Your savings account needs that money instead.