Establishing a savings account is the best way to handle both the uncertainties of life (such as job loss or medical expenses) as well as to reach your financial dreams (like college, a nice car, travel, or retirement). Experts recommend you have a savings account worth three to six months of your salary, in case of emergencies.
Pay yourself first
- When you pay your monthly bills, write a check to you, and deposit it into your savings account, or
- Ask your employer to directly deposit some of your paycheck into your savings account.
Be aware of how quickly your savings can grow
The interest that you earn on your savings is added to your savings total and increases the amount of interest you are earning. This is called compound interest.