Do you have a rainy day fund? It can be tempting to avoid putting money into your savings each month, but there is a real importance of having a savings account. Research heavily lends towards the fact that neglecting to squirrel away money each month can be a big mistake in the event of unexpected situations or emergencies.
With almost 1.3 million Australians thought to currently have little to no savings, it begs the question, are they doing the right thing, and how important is it really to have a backup fund for those ‘just in case‘ moments. So, lets examine some reasons of the importance of having a savings account.
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Call it what you will, but there are always going to be those times when unforeseen circumstances catch you unawares. The importance of having a savings account is truly significant in these situations. Be it needing major vehicle repairs or a new one altogether. Or perhaps covering lost wages due to an accident rendering you unable to work. Worse still, helping you rebuild your life again after a major life event such as navigating issues like Divorce in Australia: Who Gets What. Having funds available for reasons such as this will help give you a safety net and remove some financial issues and stress whilst rebuilding your life.
Building Good Habits
Being methodical and putting money away each month can help you build good habits in other areas of your life. Saving money each month without dipping into it requires willpower and commitment. Its just one aspect of the the importance of having a savings account. However, when you apply this level of dedication to other areas of your life, such as learning a new skill or retraining in a new career later in life, you can lean on your discipline from your money management skills to help you commit to your new plans and follow them through to resolution.
If you are new to saving money and want to build good habits slowly, start with a nominal amount each month that you won’t miss. Even $10 is a good base to start. Once you have established the habit of saving a little each month, you can start to increase this amount to build your funds and continue good money habits that will serve you well later in life.
Track Your Goals
Being able to visualise your goals can be a huge motivation. Saving money for various reasons can help you see exactly where you are on your path and allow you to track your goals. Some people do better with visual representation, and boosted savings accounts are no better motivation. Whether you are saving up to clear your debts, for a once in a lifetime vacation, or you are saving towards owning your own home. Having something tangible, you can track your progress against can be all the motivation you need.
If your motivation isn’t financial, you can use this as a baseboard to measure your progress. Apply the same dedication to your plans as you do to your savings and create a more disciplined and realistic outlook that pushes you forward and hits your target.
We hope this blog post has helped you understand the importance of having a savings account. We never quite know what life might have in store for us, so it is always good to be prepared. Plus, it is also nice to have a goal to work towards whether that be a home, holiday or new business. Best of luck with achieving your saving goals!