The first step to financial security is developing a plan. Making sure all bases are covered will help the individual to keep on top of their finances. But any plan that is not executed is worthless. Just as the decision to open a savings account in order to start an emergency fund is a great decision, it means nothing until the action is done. There are two ways to go about opening a savings account.
Use Your Bank
The easiest way to open a savings is to just go into your bank and talk with a personal banker. If you already have a checking account at the institution they can often just transfer all your information over and have the account set up within a matter of minutes. An automatic draft from checking can get it funded. While starting a savings account at your local bank is easy, you will often get a lower interest rate than if you shopped around, especially with online banks.
Most local banks and credit unions will offer similar interest rates on their savings accounts. Since they have the overhead of more staff, maintaining a physical structure, and overall more expenses, they cannot provide quite the rate of return that the online banks do. Opening an account online will take a little more work. The forms can be completed all online, or most savings institutions will allow you to call in with your information. You will need to have your social security number, address, and date of birth ready to go. When the account is set up you will receive a form in the mail. Sign the form and return it to activate the account. From there you can go online and link the new savings account to your checking account in order to fund it.
After opening the account, and linking it to your checking account, make sure you contribute regularly. The easiest way to do so is to set up systematic automatic withdrawals. Most online accounts are fairly versatile when it comes to automatic contributions and the dates. Those who are paid twice per month can set their deductions to occur on the 5th and 20th of the month, in order to go into the savings after their paycheck clears. The account can also be set up for contributions to go in every other week if you are paid bi-weekly.
After making the plan to start an emergency fund, the next step is to open the account, remember to use a bank that is FDIC insured. Unlike investment accounts, these take relatively little paperwork and can be done quickly. After the account is open, set up automatic contributions. Finally, forget about it until an emergency occurs. Just let the account work for you, while you continue to earn more money so you can save more money.
This article was first published on http://moneyprime.com.