One of the best ways of building up a cushion against financial emergencies is to make regular use of a savings account. Over the long term, just about everyone is advised to make consistent contributions to retirement accounts and the like. While this helps when it comes to guarding against financial difficulties during retirement, it is much less effective as a means of dealing with financial problems that arise in the course of the working years. Because withdrawing from retirement accounts almost always incurs a penalty on those who do so, it makes much more sense to keep a short-term financial backstop in the form of an actively maintained savings account.
Unfortunately, relatively few people follow this advice. Part of the reason for this is that money sitting in a savings account can seem like it is lying fallow, but this is not typically true. Even when Saving Account Rates are relatively low, as they currently are, the money that builds up on substantial deposits over time will generally at least match the pace of inflation. When Saving Account Rates climb higher, as they tend to do when inflation picks up, they can even produce returns that can rival less-flexible financial options like certificates of deposit.
The most important reason to maintain a savings account, though, is to have money to hand when emergencies strike. Whether that is a sudden need to repair a car or an unexpected medical bill, money that is accessible in a savings account translates directly to lower costs. Because so many people who do not maintain savings accounts find themselves borrowing when these unforeseen events happen, they end up paying far more, as a result, than those who do.
This is why experts at local banking outlets like the Pearl Hawaii Federal Credit Union so often recommend that their clients stay disciplined about contributing to their savings accounts. The fact that a savings account is not quite as liquid as a common checking account helps to ensure that the money will only be drawn down when it is truly needed. Add the additional benefit that such accounts provide in the form of accumulating interest, and it is easy to see why financial experts are so fond of them.