Pros and Cons of maintaining savings accounts

Decide whether or not savings accounts are right for you.

08:12 30 April 2013

The latest news concerning NHS is that society may suffer from a very large gap up to £29billion by the year 2020 if things remain as they are. This may be part of the reason for the institution of the benefits caps, but it may mean more attention on savings accounts as people prepare to potentially take on more of the burden.

 

Here are a few of the ways savings accounts can affect the financial future:

 

Positive effects of maintaining savings accounts:

 

• Establishes beneficial financial habits that work as effectively as hygienic habits.

 

• Builds an immediate cushion in case of emergencies.

 

• May be used in the event of a medical crisis to help pay the bills.

 

• Can accumulate interest for use during retirement.

 

• Savings accounts for children and grandchildren are also available to create a nest egg for the next generation.

 

• Having a comfortable amount in savings decreases financial stress.

 

• Lowered financial stress helps keep immune system from being vulnerable.

 

Negative effects of maintaining savings accounts:

 

• Less overall money for monthly budget expenses.

 

• Fewer unnecessary purchases can be made.

 

• Certain luxuries may need to be cut completely from budget.

 

• Some accounts earn interest at a lower rate, so earnings might be small even after quite a few years.

 

• Minimum requirements for depositing in an account may be too expensive on a tight budget.

 

What if you choose not to have savings accounts?

 

Positive effects of foregoing savings accounts:

 

• More money to use towards the monthly budget.

 

• Money available as needed without further tax burdens.

 

• No special requirements to obtain money.

 

Negative effects of foregoing savings accounts:

 

• No extra money for emergencies.

 

• Increased stress during financial difficulties.

 

• Potential to lose property to pay for excessive medical bills.

 

• No way to prevent emergencies from escalating financially.

 

Based on the pros and cons, you’ll have to decide if it’s better for you to forego savings accounts or if you should establish one today.