There are three important ways a savings account can help you. In this post we are going to discuss the first one - emergencies.
I know some people say they just have bad luck and something always seems to go wrong. The truth is, luck really has nothing to do with it. If you live in a house long enough, something will break. If you drive a car long enough, something will need to be repaired. If you have kids, they will break something – either an object or a body part. It is called life.
No one expects something bad to happen but sometimes life throws us a curveball. I was reminded of this recently. We were enjoying one of those picture-perfect fall family days. We decided to get some frozen yogurt. While we were enjoying our treats, our girls started doing gymnastics. Out of the blue, Ava slipped and broke her arm! We had to rush her to the local emergency room, and they had to put a cast on it. Even though we have good health insurance, we still had to pay a $150 co-pay for this ER visit. I definitely wasn’t planning on this expense, but it was not a big deal since we had an emergency fund. It was such an emotional day (all parents know what I’m talking about when you can’t make your baby feel better), and I am so glad we were able to solely focus on Ava and not stress about the bill.
I know many of us feel like there are never enough hours in the day to get everything done. Since we are so busy, we eat lunch out. In fact, according to a survey conducted by Visa, Americans spend about $20/week getting lunch in restaurants. While this does not sound like much, it can really add up.
How much would this be worth if you had invested this amount ($80/month) for 30 years and it averaged 8% growth per year? If you guessed $119,000 you are correct. Yes, you read that correctly. You could literally be eating $119,000!
Instead of eating lunch out, cook a little extra at dinner so you have leftovers. You could also pack a peanut butter and jelly sandwich. I know it does not sound very exciting but adding over $100,000 to my retirement account beats any restaurant meal for me.