The Best Place to Store Emergency Savings
Years ago, people would store their emergency savings in their houses. It would be a collection of dollar bills inside of a jar or box kept in a place that was easily within reach. It would sit on top of the refrigerator or in the kitchen cupboard, in front of rows of canned goods. While that storage option worked for older generations, there are much better places to stash your emergency savings nowadays.
The Problem with the Savings Jar
The biggest problem with stashing your emergency savings inside of a mason jar is that it’s vulnerable to theft. It’s not necessarily vulnerable to theft from a stranger—although a burglar may be able to spot your jar of savings and run off with it. Your jar is more vulnerable to “theft” from members of your household, including you.
Storing your savings in a jar in an easily accessible place is a bad idea. Since the funds are so accessible, you’ll be tempted to make unnecessary withdrawals whenever you don’t have enough cash on hand. You’ll take from the fund when you need money for takeout, groceries or impulse spending. And everyone else in your household could follow the same habit.
You will quickly undermine your savings goals and diminish your safety net.
Running Low on Savings
Diminishing your safety net is not a habit you should keep up with. If you’re not careful, you might not have enough savings available to handle an emergency expense when it crops up. What options will you have?
You won’t have many options, but you’ll at least have some. You could use your credit card to cover the emergency expense quickly and then pay down your card’s balance later. Or you could try to apply for an online personal loan as a solution. If you’re approved for an online personal loan, you can use the borrowed funds to manage the urgent expense in a short amount of time. Afterward, you can focus on a steady repayment process.
You can avoid this stressful situation by maintaining your emergency savings. Do that by storing them in the right place.
Where Is the Best Place to Store Emergency Savings?
A high-yield savings account is specialized savings account with high-interest rates—higher than the interest rates attached to standard savings accounts. The purpose of a high-yield savings account is to help a savings fund grow with contributions and compounding interest over time.
High-yield savings accounts tend to come with certain application requirements. Your bank might ask for you to make an initial deposit or meet a minimum balance to access the account. It might also penalize you for going under the minimum balance after opening the account. It can charge you fees and/or pause the interest rate until your balance crosses the minimum threshold once again.
So, if you’re not confident that you can meet these requirements just yet, you should open a standard savings account.
A Standard Savings Account
A standard savings fund may not help your savings grow in the same manner as a high-yield savings account, but at the very least, it will keep your funds tucked away for when you actually need them. You won’t be as tempted to make unnecessary withdrawals and undermine your emergency fund. They’ll be out of sight and out of mind.
Picking the right storage spot can help your emergency savings grow. At the very least, the right spot can stop them from shrinking down to nothing. It’s time to move your savings!
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Pranab Bhandari is an Editor of the Financial Blog “Financebuzz”. Apart from writing informative financial articles for his blog, he is a regular contributor to many national and international publications namely Tweak Your Biz, Growth Rocks ETC.
