Tips for saving a good sum for rainy days
I earn $2,500 a month and I set aside $500 in a savings account. Should I consider a current or a fixed deposit instead? Any tips for saving a good sum for ‘rainy days’? What are my options?
answer:
You’ve got to have enough to tide you over in the event of an unforeseen crisis, like illness or sudden job loss. Start by setting aside at least six months’ worth of your monthly expenses. This emergency fund should be in cash or near-cash instruments like fixed deposits. It’s smart of you to be saving about 20 percent of your monthly income. That’s above the recommended 10 percent we advise.
Current and savings accounts are usually used as transactional accounts, which most people use to manage their monthly finances such as depositing their salaries and withdrawing cash for daily use. Both accounts are interest-bearing (they offer about 0.20 percent per annum in interest) and offer basic facilities such as passbook or monthly statements, an ATM card, as well as phone and Internet banking services. A current account just comes with a chequebook for additional convenience in making payments.