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Your Savings Account Can Help You Be More Financially Stable

For many credit union members, a savings account is just a formality. They know, in theory, that saving is important, but other savings options that come with higher rates, such as IRAs or 401(k) accounts, usually take priority and that initial deposit is quickly forgotten.

Tax-advantaged retirement accounts are  fantastic, but is unlikely that retirement is your only savings goal. When it’s time to buy your next car or plan an exciting vacation, the money in those retirement accounts will be locked up tight. There’s no way to get to it without taking on massive penalties and paying a lot in taxes. If you want your money to be there when you need it, no matter when “it” is, now might be the time to take another look at a savings account with PrimeWay Federal Credit Union. Even if it’s not your primary savings vehicle, a savings account can offer tremendous benefits. Let’s look at some ways to get the most out of it!

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1.) Dividend rate isn’t the only consideration

If you are looking to maximize your returns, putting all your money into a savin

gs account is probably not the best plan. It’s unlikely that your financial plans call for maximizing returns on your investments, though. While it’s true that higher return investments do exist, savings accounts offer unique benefits.

First, savings accounts are NCUA insured up to $250,000. If something unthinkable happens, you’re promised to be reimbursed for your losses. That’s quite a lot of security for your hard-earned cash.

Another benefit of savings accounts is their liquidity. If you need the money in your savings account tomorrow, you could get it. You can withdraw cash in person, at a PrimeWay Federal Credit Union branch or from an ATM. You also have access by using our PrimeWay Online Banking or PrimeWay Mobile Banking app to transfer funds to another account to make payments on a loan. You can also transfer funds to your checking account to conveniently use your debit card without worries of over drafting.

2.) Automate, automate, automate!

Luckily, your savings account can be automated; this makes saving so much easier. Here’s why. You know that exhausted feeling you get after you’ve been shopping? You haven’t done too much physical activity while shopping, yet you feel exhausted. Know why? Because you just made a lot of decisions on the spot. That feeling has a name, and it’s called decision fatigue. Making a commitment to something takes willpower and energy. Waiting until the end of the month to decide what to do with your extra income can encourage unnecessary spending. That’s why it’s great to know your savings account can be automated. You can set up automatic transfers between your draft account and your savings account or even make it part of your employer direct deposit. Make that decision once and then never have to think about it again.

3.) You need an emergency fund

What if your company experiences an economic down turn, and your job is eliminated? What if you have to take off some unpaid time and leave work for a while? What if your car breaks down? Do you have a plan in place to cover these types of situations?

The best way to prepare is to build a solid emergency fund. How much should you have saved? Most experts agree that 6 months of living expenses is a good target, though that number is variable depending on your industry. What’s a living expense? Count anything that you could not cut if you absolutely had to do so. For example, your housing, utilities, insurance, debt maintenance and food. A savings account provides the security and flexibility that you need for your rainy day fund.

4.) Keep your funds separate

If you already have an emergency fund, you may have some other savings goals. Suppose you plan to start a business, but need start-up funding to do so. You might want to put away money gradually over time to make your dreams a reality. If you keep that money in your draft account with the rest of your funds, there can be a real temptation to spend it. Resisting that urge depletes some of that willpower, which makes it easier to make impulsive choices in other areas. Instead of relying on your self-control to keep those savings safe, you can build separate accounts for each specific savings goal.

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