- Shay Port
2020 New Year’s Resolution #1: Build A Savings Account
Updated: Sep 16, 2020
Do I really need a whole New Year’s resolution for this? Is building a savings account really that important?
Yes. Very. Super-important. Dump the change out of your wallet right now and put it in a piggy bank. Anything. Just start saving.
Here are just a few things your savings account enables you to do:
Pay for new tires when you get a flat that can’t be fixed.
Not have to pay an additional 25% in interest on credit card purchases.
Get health insurance.
Go on vacation.
There are few financial woes or financial worries that can’t be fixed, or at least greatly ameliorated, by having a savings account. It is not hyperbole when I say that savings is your ticket to freedom – true, unbridled freedom like nothing you’ve ever known before. Especially if you’re used to living without having a savings account.
The mere fact of the account’s existence creates a feeling of peace and tranquility that extends far beyond the practicality and usefulness of what the money could actually be used for. It provides a feeling of security. Something that all the money you spend really cannot buy.
“Sure, Shay” you’re saying, “that all sounds well and good, but I’m not earning enough to save.” Of course there are extenuating circumstances. If you’re making minimum wage and you’re a single parent with three children, saving is indeed a challenge. But even then, you could probably sneak $5 a month into an account somewhere. In fact, that $5 a month that eventually turns into $200 might become your saving grace at some later point down the road.
Here’s the general rule: if you’re earning anything, you’re earning enough to save. It’s ok if you can’t save $500 a month or even $200 a month. But can you save $5 a month? Can you save $50 a month? The question isn’t can you save? It’s how much can you save?
It adds up. It really does. I’m an accountant so I know that adding money to other money makes the total amount increase.
Think about it. For the last ten years you’ve said you haven’t made enough to save. But you went out for dinner, you bought clothes, you even went on vacation. You just didn’t save anything. If you had put away even $50 a month (a modest sum by most accounts) you would now have $6,000 saved. It is a fortune? No. But is it enough to put a down-payment down on a house? Absolutely. As a first-time homebuyer, with an FHA loan, and a purchase price of $125,000, you would only need to put down $4,375. And you would still have some money left over to pay for some closing costs. Then, when the value of that house appreciates, you can sell it for a profit and turn that initial $6,000 savings into $50,000 (or more).
This year, when the ball drops in Times Square, and you’re ready to make your list of New Year’s resolutions, make the one that could truly change your life forever – to start building a savings account. And while you’re at it, resolve to build a retirement account too. There are many ways and many places to do this. Here are a few: www.captitalone360.com or www.synchronybank.com (regular savings) or www.capitaloneinvesting.com or www.schwab.com (retirement savings).
You won’t be sorry. I promise. You probably won’t even miss the money.
The important thing though is to get started now. Today. Really, don’t even finish this post. Just put some money somewhere and save it for a rainy day. Unless you’re living in Los Angeles, where it hasn’t been raining very much, a rainy day is coming. And when it does, make sure you’re one of the lucky ones, sitting on a beach in some exotic locale, drinking a tall, cool mojito, all paid for by the money you saved up just for that purpose. Ahhhhh, now that’s freedom.