Why You Need a Savings Account as An Absolute Necessity
If I didn’t already know the importance of a savings account it has been engrained in my mind even further today. Life can throw you curveballs from even the smallest of actions or mistakes, but this doesn’t mean that you shouldn’t always prepare when the weather is fair and you have an opportunity to stack up resources. So just now I rolled through a stop sign while leaving my apartment complex, and got written up for a $200 running stop sign violation, fun times. I would bite the bullet and just pay the infraction if I didn’t already have an at fault accident on my record and if it wouldn’t raise my insurance rates like 40 to 50%, but that’s another story entirely. And so, this experience yesterday made me realize that having a liquid savings account with as much money in it as possible for emergencies is extremely important, and I am going on record as saying that a massive way to help protect yourself against possible tragedies, is to try and keep a minimum of $100,000 in liquid cash for emergencies. When I tell you the list of possible events that could completely turn your career, and your life sideways (I would go as far as to say $100,000 or 3 years expenses, whichever is higher) you will understand why a cash cushion is necessary for investing, and why it can actually help your returns over the long run. For more information on all things business and finance, read on or subscribe to our blog for additional details and information.
Here are some major issues that could occur that I say warrants having this much money in liquid cash:
- Health Issues – Mild or major, even with decent health insurance an MRI, or an X-Ray or a CT scan can really run your bank account down, best to always be prepared for the worst.
- Car Troubles – New Car, Car Accident, Engine Failure, Speeding Ticket, etc. – I have probably spent over $1,000 on my car in the past 90 days, $200 for this new speeding ticket and $800 for an engine cylinder issue in order to fix it.
- Job Issues – Jobs are always somewhat insecure in even the most secure of places, if you think about it, the only reason someone is paying you is because you have a certain skillset, or because they need you to do some routine task over and over again that they don’t want to do, nuff said here.
- It is a cushion against not selling your investments – The key to investing is to buy and hold stocks, bonds, index funds etc. over the long term. If you have to keep eating into your investments and making trades in order to pay living expenses, then you are costing yourself more money in taxes, transaction costs, time spent placing trades, and the like. Best to have a cash cushion that is strong (something like CDs and Savings Accounts will work perfectly) so you can let your investments ride for the long haul.
- And so much more!
Why You Need a Savings Account as An Absolute Necessity, And Why Your First Goal In Life Should Be to Have $100,000 Liquid
And with all of the above as my argument for this, I say that having a savings account with this much money is not necessarily a luxury, but something that you should try to plan for when you are young as an absolute necessity. Without this, you are essentially standing naked in the rain. The best way to stack up your investments is to have a good income, in order to have a good income you need to be able to get out there in the workforce and fight, in order to do that you need to be healthy, have a good resume, be well educated, and have a working car, as well as having some runway to ever go on an interview if such is needed. With $100,000, you are prepared and able to do all of this, and as the kicker, it makes it far less likely that you will ever need to touch your investments, allowing you to stay invested for the long term and reap much higher investment returns, it’ll even give you some interest cash that you can spend, or reinvest as you please ($100,000 cash in a combination of Ally CDs and a Savings account can get you something like $500 to $600 per year right now depending on how you structure your ladder…which I know is way less than inflation but…still money is money.)
Why I Recommend an Ally Savings Account, How to “Day Trade” Your CDs, and Why Looking at My Savings Account is My Favorite Thing in the World
I have a lot of fun doing this, and it is almost like a more secure type of stock trading. And yes as a finance blogger, I am very much well aware that inflation is at like 6.2% right now as of the end of 2021, and I am aware that my money is literally deflating by like 5.5% each year. Just saying this makes me want to do two things, stack up more cash into long term CDs to try and inflation hedge (turned out to not be a bad blog name after all) and to put more of my cash into this website, which I can get a way higher return on than even the stock market (I figure that for every 1.85 cents I spend to get one blog post, I get something like 365 visitors per year, which yields me 12 clicks on affiliate links, which gets me about $2.50 per year, so for every $1.85 I spend I get $2.50 per year, for about a 9 month payback period and pure arbitrage profits after that>>not too shabby after all, it is a 1450% return in 10 years>>>to scale to a virtually unlimited amount…but I digress.)
Final Thoughts on Why You Need a Savings Account as an Absolute Necessity, My Opinion
And that’s my final opinion on why you need a savings account as an absolute necessity. For more information on all things business and finance, read on or comment down below with your thoughts and opinions. Till next time, you heard it first right here at Inflation Hedging.com.
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