Opening and maintaining a savings account is an essential part of a responsible financial plan, especially if you are working toward a specific goal. In 2020, American adults had a median savings account balance of $3,500, with nearly 75% of them stashing those savings in physical banks or credit unions. If you have been wondering if you should open a savings account, here's three important reasons why.
A savings account is a financial tool that can help individuals or joint account owners build an accessible fund for emergencies, save for large purchases (e.g., a home, vehicle, or family vacation), pay for high medical expenses, and more. Some banks and credit unions even offer perks for savings account holders, such as the ability to earn dividends on their account balances.
Still not sure why you should open a savings account? Here are a few great reasons to open one today:
There is no risk of losing your money after it is deposited into a savings account. Unlike an investment account that fluctuates based on economic events, your cash is backed by the Federal Deposit Insurance Corporation — a government agency that insures money placed in banks. Financial organizations like Texas Tech Credit Union also protect their members' savings accounts through insurance coverage from the National Credit Union Administration (NCUA), which covers up to $250,000 per person on a single account.
The cash in your savings account is liquid and available if you need it, whether it be for unexpected medical costs or periods of financial hardship due to job loss. The money can be withdrawn or moved to your checking account if you wish to make a payment using a debit card or check.
It is beneficial to keep 3-6 months’ worth of expenses in your savings account if you are saving for a major purchase, such as a vehicle or a down payment. Get started by depositing small amounts of money from your paycheck into your savings account during each pay period. Although 3-6 months’ worth of rent, bills, groceries, and utilities may seem like a lot, smaller deposits of cash can quickly add up over time.
Many banks and credit unions don’t have minimum balance requirements when customers or members open savings accounts. This means you won’t face any penalties if your balance falls below a certain amount. Texas Tech Credit Union’s traditional savings account is great for individuals who want quick access to their money and have less than $1,000 ready to deposit.
Texas Tech Credit Union’s traditional savings account includes:
Are you ready to take ownership of your financial future by opening a savings account? Start by answering the following questions: