Most adults open bank accounts to receive salaries, receive loans, or for other transactions.
The accounts, however, can enable you to do much more, especially when saving, and should not be taken for granted.
Financial experts say difficult economic times require better saving strategies and investment plans. Here are some ways of ensuring that your money works for you and cushions you during difficult financial times.
Have a sinking fund
Setting up a sinking fund is a strategy that will enable you to save for your anticipated expenses.
Such expenses include offsetting a long-term debt, a vacation, a gift, or a lifestyle upgrade.
To set up a sinking fund, you will set aside money every month in different categories by setting up multiple sinking funds or one category but setting up a single sinking fund.
It should be more specific because you know exactly how much you will put in, when you will use it, and what you will use it for.
The aim is to save up a small amount of money over a longer period instead of raising a huge amount at once. A sinking fund will make you more extravagant and help you lose any guilt associated with large purchases.
Have an emergency fund
This is money that you put aside for the unknown. The fund is useful when you have a financial emergency and can act as your backup source of income in case you lose your job.
An emergency fund should have up to three to six months of expenses saved for any and all possible emergencies.
An emergency fund comes in handy when you need to raise funds for a hospital bill, or when you have to replace your gadget or support relatives through a crisis.
Ramsey Solutions, a financial institution, states that you “should consider it a safety net between you and life.
“You have no way of knowing if these things are coming or when they’ll happen. But you do know life happens, so you have the money set aside and ready,” Ramsey Solutions stated.
Have an Investing account
Setting aside a certain amount of money in a separate savings account can make it easier to grow funds for the short or medium term, and enable you to make that investment you have been dreaming of.
It is easier, both psychologically and practically, to avoid overspending when you keep the money separate from your day-to-day spending cash.
“Once you have considered how you will put the money into use and the timeline for which you plan to save and invest, information on how to invest becomes much more useful,” Forbes Advisor stated.
You can save up to invest in bonds, stocks, SACCOs, Real Estate, or business. Once you hit your targets, use the money for the right investment.
A checking account is intended to hold money that you want to spend. Having your money separated into different savings accounts, although more restricting, will enable you to develop a better saving culture.
