I have been trying to save money because now I am out of college and on my own, but I also want to save for a house or for a rainy day. I am trying to determine what is a good reason to take from your savings.
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8 Comments
None…..pretend the money isn’t there…..set up a budget and stick with it…that includes budgeting money to go into savings. I sold everything I had and dipped into every account to handle a situation…..not that its over I have nothing, and still owe more…….I wish I would have never touched my savings or my retirement. Sticky situations work themselves out………once you run out of money and credit…….lifes different……..as long as you have a balance in savings you have a tool to use to survive. So my answer is….you touch your savings when you have to survive……food when there’s none, gas when it comes to pushing your car to work, car repairs when it cost you more not to make it to work, and shelter when its cold and wet and your car is a horrible hotel room. A savings account is a status….people pay you for it…….you get credit because of it…….you walk taller when you have it…….you sleep better knowing its there………paying off debts with savings is bad…….you can’t fix cash flow problems with a savings…..its just a temporary fix to a cash flow problem, fix the cash flow problem, don’t through a temporary and costly band aid on it. Give a man a fish he eats for a day….teach a man to fish he eats for a lifetime. See the parable……….You could save enough money to eat and live from the interest……be disciplined enough to live that way…….
Let me know it this helped…..if it didn’t I’m going to retire from answers and open up a used flower shop…..good luck
i make it rain
It’s a matter of priorities; “instant gratification” vs long-term planning.
> “rainy day” -
be specific!
On a scale of 1 to 10; What kind of priority is it if you must go to your savings in the near term?
10 being a matter of life or death and 1 being “it would be great to have”.
You should be saving at least 10% of your income for rainy days, retirement, down payment on car or house. Have it done automatically, take from your paycheck or from your checking account and transferred directly to savings account. Join the 401k at work, and get the benefit of matching funds.
You should also work hard on building your credit. It will get you better loan terms and lower rates when you buy a car or house if your credit is good. Pay every bill in full and on time. Don’t carry balances on your credit cards, if you have balances, pay them down. Always pay at least double the minimums on credit cards. Pay your student loans.
Basically, once the money is n savings you SHOULD NOT take the money out. It is there for your future.
If you already have a savings account – great! If not, go to a local bank and open one. Talk to your employer about automatic deposit so that a portion of your paycheck is automatically deposited into that account. The remainder should be put in a checking account so that you can pay bills and whatnot without touching the savings account.
If you have a savings account and are wondering what would be valid reasons to tap into it: the car breaks down, you suddenly have to move from one state to another, the water heater leaks and you have to replace it and repair any damage…The list is endless.
Just make sure you only tap in for real emergencies, not because you want something and can’t afford it until you get paid again.
I am answering this from the assumption that you are talking about money you have set aside for a rainy day in a savings account. Not retirement saving.
A good reason to dip into your savings is for any of life’s little curve balls. IE; your transmission needs to be rebuilt, you get into a fender bender and you have $1,000 deductible. Things like that are what we have savings accounts for, don’t be afraid to use it, just dont forget to put it back so its there next time.
Something breaks down. A medical emergency.
Not enough information. Likely to personal.
If your savings is dedicated to long term retirement–Not until your retire.
If you are saving for specific reasons like a purchase then not unitl you are ready to make the purchase.
See the links in the resource for budget, savings, retirement and dealing with debt information.
Dave Ramsey is the man!
Zirkamer