The Antidote for Fear
The antidote for financial fear is money in the bank. It changes everything because you lose that broke feeling. Money in the bank changes your outlook because it changes your attitude. A nice stash of cash, tucked away in a high-yield savings or money market account returns big doses of peace of mind.
Money in the bank creates margin. Margin helps you to think more clearly and to make decisions that are not driven by fear. As your savings grow, so do your options. And with options come hope for the future.
Saving money strategically and with purpose does more than accumulate money in a safe place. It develops character traits of self-reliance and financial maturity. And patience. There was a time when people had no choice but to prepare for their own emergencies. They had no safety net, also known as a credit card, to cover them when things went wrong
All of creation has been designed with the will to survive. That is especially fascinating to study in the animal world. Who hasn’t seen squirrels and ants storing up during seasons of bounty in preparation for lean times ahead?
We humans are endowed with survival instincts, not unlike animals but with at least one distinction: we can think and reason. And ironically that, it seems, has become our downfall when it comes to keeping our financial survival skills intact.
What Went Wrong?
I place a great deal of blame on the consumer credit industry, which has managed to brainwash an entire society into believing that saving money is not a priority.
The message of consumer credit is, “Go ahead, spend what you have, get all you deserve. Don’t worry about anything! We’ll be right here to help out if you experience some kind of emergency. You need our credit card so you will be prepared for emergencies. You work hard, there are so many things in life to be enjoyed, so go ahead and live it up!” Granted, I’m no ad writer, but you get my point.
Make It Easy
Your long-term savings needs to be kept in its own account where the money is safe, easily available to you in time of dire emergency, and subject to earning the highest rate of interest available. Safety. You want your money safe from outside thieves, from accidental loss, but safe from you too. That means you don’t want to keep it at home where making loans to yourself might be a little bit too tempting. You want your account in a federally insured bank or credit union, which protects your money from institutional failures
How to Open an Online Savings Account
You don’t have to switch banks to get the best savings account for your longterm savings. The way it works is that your online savings account gets linked to your current checking account, making transfers back and forth easy and very convenient.
If you have never banked online, you may be concerned about whether it’s safe. Or you may be intimidated because it requires that you share your personal information online. Once you come to understand how to open a savings account online and discover the high-tech security measures these banks use, you will find it to be simple, at least as safe as a regular bank, and a rather convenient process.
How Much to Save
Your emergency fund needs to contain at least enough money that you could pay all of your bills and monthly expenses for six months without a paycheck. The principle is this: if you become unemployed or for some other reason your income is temporarily cut off, you need to be prepared to take full responsibility for keeping all of your bills paid and your life intact until you can find another job. That’s the kind of emergency that this account is for, not for buying new clothes or going on a fun weekend vacation.
Your attitude about your emergency fund will either make or break it. If you see it as a pool of money to be used at will for anything that suits your fancy at the moment, you have completely missed the purpose of an emergency fund. If and when the funds are used for the purpose for which they have been set aside, they must be quickly replaced. Maintaining an emergency fund provides much-needed space between you and the financial edge.