In current times, a healthy savings account is more important than ever. However, an alarming report from Zero Hedge affirms that nearly 50% of Canadians
do not have
more than $200 in savings. The awareness and ability to save money always comes in handy in case of a job layoff, medical emergency, or other financial expense that may appear at a moment's notice. This is why an overall understanding of how to build a healthy savings account should be regularly applied common knowledge.
Create a Realistic Budget and Stick To It
At first glance, coming up with a budget may not seem related to saving money; however, Mint
listed the aforementioned method
as the first and foremost step to building a healthy savings account. In and of itself, the ability to budget has many short-term and long-term payoffs. However, regarding financial savings, budgeting allows each person to assess their income and determine how much or what percentage they wish to put aside. Generally, budgets should not be too austere or, conversely, too relaxed. The ideal budget allows the individual to put an allotted amount of funds aside into his or her savings account while still comfortably fulling their other financial obligations and having a slush fund to spend on nonnecessities.
Make Your Money Work for You
Most adults have heard the popular phrase "make your money work for you" at one point or another. However, this strategy is often easier said than done. Most people are conditioned to believe that financial health will occur if they work hard enough and earn "X" amount of dollars. While working hard to achieve capital gains and career success should always be encouraged, knowing how to make the money you've earned then work for you (and multiply) is a very important step for anyone who is serious about building a healthy savings account.
Investing is the fundamental way for each person to make their money work for them. Stocks and bonds, mutual funds, and index funds are a few optional sources for one to invest in. 'Shark Tank' star and multi-billionaire Mark Cuban recently
as one of the best tips to save money in 2018.
Use Credit Cards Frugally
Although budgeting and investing are excellent money-saving strategies, the ability to preserve one's earnings and not spend them prior to earning them is absolutely paramount. Countless people are bogged down by massive credit card debt and, even worse, the interest rates which follow after the bill comes due.
Any individual who is serious about creating a healthy savings account should carefully monitor the manner in which they use credit cards. Some people have suggested abstaining from credit altogether, however, when employed pragmatically, credit cards can have certain monetary benefits. Many credit cards come with redeemable cashback points and other monetary rewards. Ultimately, each person should live below their means. If one is unable to afford something, they should not charge it to a credit card. Sometimes this may entail cutting back on certain expenses, hence the original suggestion to create a realistic budget.
A Final Word
The ability to budget wisely, invest strategically, and use credit cards frugally will inevitably come in handy. While the aforesaid tips are not the only ways to build a healthy savings account, they are definitely the most basic steps, to begin with. A financial emergency could occur at any time and each individual has the responsibility to be prepared.
Authored by: Gabrielle Seunagal