- 18 Nov 2020
- Reading time
- 5 minutes
“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett
This statement from one of the wealthiest persons in the world emphasizes why it is very important for everyone to develop a disciplined saving culture.
Saving money is the best financial habit you can cultivate as it does not only help you in times of emergency but also helps you avoid debt, reduce your financial stress and give you a greater sense on financial freedom in the long run.
There are endless reasons to save money just as there are endless places to save money. The answer to where is the best place to save money? Is relative. While some people prefer to keep their money at home, most people prefer to save their money through modern options like; Banks. While others prefer to save in places that would make their money grow and accrue interest overtime ( for example, investing in cryptocurrencies and buying Gold). Banks also provide for interest-earning accounts.
How Coronavirus Has Affected US-Banks
The coronavirus pandemic has affected the economy of most countries throughout the world and the effect has been felt by major sectors including the banking industry. US-Reviews takes a look into the effects the pandemic have had on banks in the United States.
· Dwindling central bank interest rates has affected savings account interest rates that a lot of banks rely on to get customers and drive deposits: According to the New York Times, Central banks across the globe have been making emergency rate cuts to cushion their economies as coronavirus threatens growth. The effect this has had is an increase in loan activities from banks while also discouraging banks from offering high interest rates on savings accounts to increase profile margins. A lot of banks in the US that offers high yield interest on savings accounts are being pressurized to decrease their interest rate as a result of the rate cuts.
· Short-term loan activity has increased due to inability of some consumers to go to work: According to Global Workplace Analytics, only half of the US workforce works in a job that is compatible with at least partial telework. With a lot of businesses being made to shutdown due to the Covid-19 pandemic, a lot of consumers and workers have either lost their jobs or had to take pay-cuts. This has prompted a lot of such workers to take medium-sized loans and this has resulted in a spike in business for banks and credit unions. For example, banks like CIT Bank offers financial services to small business and offers high interest on savings.
· Online Banking has experienced remarkable growth: Another major effect the Coronavirus pandemic has had on banks is the geometric increase in online banking. Customers armed with the knowledge of social distancing and the need to avoid being in the crowd are generally reluctant to go to banks and therefore prefer to conduct their transactions online. Furthermore, most banks have temporarily closed their branches making people turn to digital payment since it does not require physical contact.
Is it safe to save your money at banks?
Financial advisers and online reviews have encouraged the idea of saving in the bank. The reason for this is not far-fetched as not only does saving in banks curb you from unnecessary spending but also provides security for your money since most banks are usually protected through insurance policies. Here are a couple of reasons why it is safe to save money in banks.
· Your savings will earn interest: Money saved at home loses value over time. Saving money in banks and financial institutions such as; Silver Gold Bull, ensures that your money appreciates on the long run. You can be rest assured that your money will still be useful in future aside enjoying the interest that has accumulated overtime.
· No risk of fire, natural disasters or theft robbing you of your savings: Aside the fact that most banks have modern security apparatus securing your savings, insurance policies cover for money that is lost due to theft or natural disasters in the bank. This is the exact opposite of what obtains when you save your money at home.
Other alternatives to save your money
Banks constitute some of the safest places to save your money. However, if you keep saving money in banks then you most likely won’t experience significant increase in your return. According to the FDIC, the recent averages are 0.09% for savings accounts, and 0.16% on money markets. With the inflation rate just north of 2%, there is a high probability your are failing in your wealth management by saving it in the bank. Here are alternative ways to save your money.
· Online Banks: Although in recent years, online banking has turned to a norm and most traditional banks now offer online banking. However, online banks are able to offer higher interest rates on deposits because they naturally don’t have to deal with the cost of maintenance that accompanies traditional banking.
· Gold: Most people believe it is better to save in man-made currencies when it comes to saving. However Finance companies reviews suggest it is better to invest in something less risky like oil or gold. Aside the fact that currencies are controlled and manipulated by central planners, in today’s age of technology, these currencies can be frozen and confiscated in a matter of seconds.
· Cryptocurrencies: Lots of cryptocurrencies are highly volatile and you investors can win a large sum of money in a short period. Though there is also the possibility of losing, good online security and background research will help make sure your cryptocurrency investment is as profitable as possible.
How online reviews helps users find reliable wealth management companies and banks.
Before choosing to invest with any investment platform or wealth management company, it is advisable to check out online reviews for objective opinions of previous customers to give you an insight on what you can expect.
US-Reviews makes it easy for users to find reputable financial institutions and banks that provide different types of bank accounts and savings method available in the US. You can also read through reviews of previous customers of these financial institutions to help you make informed decisions when deciding to save or invest.