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The simple act of opening a savings account can easily make an enormous positive impact on anybody’s finances. That’s something that we can all easily agree on.
To simply put it, when saving money, one can efficiently forge any path towards a specific goal, as well as build a decent leeway for any unexpected need. However, there’s something that people don’t tend to think about when managing an account of this type.
When dealing with savings accounts, one of the most profitable decisions anybody can make is opting for multiple accounts simultaneously, with each one being dedicated to a specific purpose.
Why? Because it will be of extreme assistance when it comes to several essential aspects of financial management. Mainly: identifying your different goals, keeping them on track, avoiding debt, and more.
As expected, these accounts will exponentially vary from one another. Of course, it all depending on your current situation. However, several needs are hugely common for just everyone, and that we would highly recommend for everybody to always be working in because of it.
As the name states, this fund is meant to protect you from any surprise expenses, like a job loss or unforeseen medical bills. For these same reasons, this is the one type of savings account that nobody should ever miss out on.
Ideally, you should always be aiming for your emergency fund to cover up to three to six months of living expenses. That way, if you ever found yourself in need of it, you will very likely manage yourself just fine while also giving you enough time to adjust your everyday fund for any related expenses that might still come afterwards.
Do keep in mind that administering an emergency fund is no easy burden. It will take time to reach a satisfactory amount, but that’s okay. As long as it’s among your financial priorities, and you never touch that money unless completely necessary, you’ll do fine.
Car purchase or repair fund
As long as you remain a vehicle owner, you can safely bet that you’ll find yourself in need of repairing it at some point or another.
When this time comes, do you want to find out that you can’t cover these expenses? If the answer is no, then you should start saving money for all future maintenance and repairs right away.
Nevertheless, you should also realize that no car lasts forever.
Ideally, you should get the most out of any vehicle while it’s still in your possession, but sooner or later, it’ll be better for you to make a complete change. At this point, this will represent both a worthy investment and of great practical choice.
As you don’t want to put yourself in debt with the purchase of a new vehicle, you should also aim for a car fund that will allow you to pay the most out of its actual cost. If possible, even the total amount itself.
Home repair fund
Likewise, as a homeowner, you should also expect necessary repairs and maintenance at a future point in time. However, these expenses can very definitely outweigh those of any car maintenance. Significantly.
If you ever found yourself in need of home repairs, with no money at hand for them, any kind of loan would then prove massively harmful for your overall finances. To prevent this, you instead should aim for a home repair fund.
If you are a renter, you should also be contemplating a need for a home repair fund. Nonetheless, as your landlord will most probably handle most of the repairs, you will most likely not need such a big repair fund as that one of a homeowner. But you still have to be prepared for any expense that your landlord won’t be able to cover.
Everybody enjoys going out on vacation once in a while. On the other hand, nobody likes not being able to due to a lack of money.
To make sure you and your family can have a secured and fantastic vacation, you should consider opening a dedicated savings account. This way, you can rest assured knowing that you can easily cover all necessary expenses.
Big purchase fund
Eventually, everybody will find themselves in need of a big purchase that won’t be covered with a single paycheque.
Once again, you can ensure you can successfully carry out that said purchase by setting aside some money in a dedicated savings account. Likewise, as you would most likely be paying the total amount on the spot, you will skip any unnecessary financing or credit card use. Meaning, your finances won’t be affected by this purchase.