3 must-have saving accounts
Basic financial principles 101
Whatever your source of income — a salary, a business, freelance work, or a side gig — it is crucial to diversify your money throughout manageable financial accounts.
1. Emergency Fund
It is crucial to have this account. I can’t emphasize the necessity enough. You can pull yourself out of many financial binds by having an emergency fund.
Emergency Fund: An emergency fund is a bank account with money set aside to pay for large, unexpected expenses, such as: unforeseen medical expenses, home-appliance repair or replacement, major car fixes, unemployment.
How much should I put in an emergency fund?
The short answer: If you’re starting out, try to set aside an amount that would cover 6–9 months of your major living expenses (e.g utilities, rent, car maintenance). But keep working your way up (the money you have in your emergency fund the better you edge yourself against the unexpected)
The long answer: Another thing to consider when setting up your emergency fund is your financial circumstances three to six months’ worth of living expenses may not work for you due to your financial position, so you should have with yourself and review your finance to see how much you can put aside monthly that can cover any unexpected financial obligation.
You might need to set aside more money if you freelance or work seasonally. If you do lose your job, you could use the money to pay for necessities while you find a new one, or the funds could supplement your unemployment benefits. When you’re your own boss, everything costs extra. You are responsible for own finances, taxes, and even health care.
Note: E.F is the money sitting pretty in your savings account and isn’t invested in the stock market or your employer’s pension plan
You certainly don’t want to have to worry about selling off investments to pay rent when things start to go south.
2. Investment account
Everyone close to me knows my gospel of “It is never too late to start the evening.” People often come up with excuses like “they’re too broke” to start investing. Others avoid tackling investment head-on because they view it as “delaying gratification” and for a variety of other reasons.
As my community members are aware, you can start investing with as little as N1,000 and as early as yesterday. Cutting N500 from two unnecessary expenses can do a lot for you in five to seven years.
Investment: An investment is an asset or item acquired with the goal of generating income or appreciation.
Investment is of three kinds
1. Ownership Investment: These include stocks, real estate, and precious metals are all ownership investments .
Ways to make money from this: Capital gains, appreciation and Dividend
2. Lending investment: These include bonds and even savings accounts.
Ways to make money from this: Interest
3. Cash and cash equivalents investment: These include money market accounts e.g mutual funds, fix deposit, treasury bills. They are easy to liquidate when needed and repay investors with a modest amount of interest.
Way to make money from this: Usually fixed interest on the amount during the duration of holding this investment.
And also, when you start investing, don’t just dump 1,000 naira today and do nothing — Be consistent. You cannot plant a seed and not consistently invest water in it, it won’t grow and yield fruits.
If you live in Nigeria or the UK, make inquires on registered “asset management companies” in your country. Open an account and speak one-on-one with a consultant who can guide you through the process of investing safely.
As an alternative, you can download my course for beginner investors, which highlights and clarifies everything you need to know about getting started in investing.
3. High-interest saving account
Next to having a commercial savings account, this is very good to have. High-interest savings accounts help to preserve your money make sure it isn’t suffering from incessant bank fees.
Enough is Enough with incessant bank fees.
There are not many ‘high-interest’ saving accounts in Nigeria. However, popular fintech apps like Piggvest, Cowrywise, Ladda, Optimus, Kuda, etc will help you enjoy every bit of their money.
I hope you found this useful.
Digital Finance Hub is giving it most downloaded course “The Beginner Investor Course” at a ridiculous discount. This opportunity will expire August 10, 2023.
But those who [are not financially ethical and] crave to get rich [with a compulsive, greedy longing for wealth] fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction [leading to personal misery].
1Tim 6:9
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