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Saving For A Rainy Day

Max C. Bingman - Wednesday, July 27, 2016
A little less than half of US households have a savings account with less than $3000.00 set aside for a rainy day. Just over thirty five percent of mid to low income households have a savings account, usually totaling less than $1000.00. Few would argue the practicality of saving for a rainy day. Unfortunately, most don’t know where to start.

So, are all savings accounts created equal?

The answer is a resounding , NO. To choose the best savings institution you need to be prepared to ask the right questions. Bu before you get too concerned with which institution to use, you need to understand your own needs and how they will be best met.

If you are looking for a savings account that will be the fix all for your futuristic growth planning, look elsewhere. Most savings accounts do not pay more than .25 percent interest. However, the right savings account can help you overcome personal challenges to help you meet your savings goals. Savings accounts are best used for the safekeeping of those rainy day funds. When you have a raging tooth ache, or stalled car, you want ready access to the money to end the pain.

A couple of questions you should answer before shopping institutions include:

How much do you need?

This question may not be as easy to answer as you might think. Some advisors recommend enough to live your lifestyle for a given period of time. However, that grand total may not be the same for everyone earning what you earn. You might conclude that since your monthly cost of living is $5000.00 per month that $15,000.00 should be ample savings for three months. Have you considered the age of your car? How about your family health history? Are you at higher risk for health setbacks for any reason? How old is the roof on your home? Are your appliances up to snuff? We’ve all heard the expression, “when it rains it pours.” Well, when it comes to emergency saving knowing your risk is critical. The higher the risk the higher the need.

How much can you save?

Finding a comfortable baseline will ensure you actually do the saving. You may manage to white knuckle away a few months living cost only to find you binge spend it all when you plummet into depression after months of sparse living. Coming up with a plan you can live with is critical.

It is also a good idea to identify and saving measures you can take to grow your safety net faster. For example, you might consider buying a nice coffee maker and making your joe at home instead of hitting the drive through every morning. You might be able to declutter your home and raise a considerable amount through a rummage sale.

Now back to the best account for my saving plan. Keep in mind that there are vast differences between big banks and credit unions.

If you do a lot of travel and want to have ready access to your money across the miles you may find big banks to provide better accessibility. Bigger banks usually require a higher minimum balance to avoid fees. Smaller banks may be a better match for someone who needs to put away a little less. You should also ask about withdraw fees and even deposit fees. Some institutions will pay slightly higher interest if you set up an auto deposit from your checking account. Credit unions usually require lower minimum balances and pay slightly higher interest. Make sure you ask about “dormancy fees” which may come under any number of names. If your account sits dormant for a period of time without deposits or withdraws you could accrue a fee.


Thank you for guiding me toward financial success in my retirement. My investments have done well and I am quite pleased with the results. Investments for You, Inc., is a company I trust and I am confident in my financial future . . . thanks to you.

Best regards from an appreciative investor.


—J Horton

Max helped us save enough money to send my daughter to college even though we didn't get started until she was in high school.

—L Shepard


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