A separate account to stash money can have a lot of benefits
If you have been following our recent articles, you will have noticed that helping gig workers better manage their finances has been on our mind.
In this article, we reminded people that saving for retirement is not as hard as retiring without savings. Start saving for retirement when you are young and look for tax credits that you can be eligible for. If you start small, it won't be that hard. Or in this article where we said that the best time to save money is when you have some. Yes, yes, we know, it sounds obvious but too many of us are spending money when we have it rather than stashing some of it for later. It's a lot harder to save money when you don't have any or don't have enough.
"OK so where should I save money? Is a savings account really a good way to put money aside? Why should I open a savings account?" are questions we got from several of you following these articles. So we decided to address what we think are the 4 main advantages of a savings account.
A savings account helps you save for things that are necessaryMaybe the wear and tear on your vehicle is getting to a point where it is too much and you will need to buy another car.
Maybe you realized you could make more money with a bigger vehicle like a cargo van to do deliveries and you will need money for the down payment.
Maybe you were told that you have to pay taxes on the income you are receiving and you were not really aware of that.
There are so many examples where you have to save money to pay for things that are necessary for your professional life. And we are not even mentioning your personal life like when you may want to move to a bigger apartment, repay your debt, etc.... If you owe money today or know that you will have to pay something to someone in the future, having a savings account makes so much sense.
Having a savings account separate from your day-to-day checking account means that you will make a conscious effort to put money aside when you can afford it at your own pace. It may not be easy at first but you will probably be super happy when, after a few months, you can pay the new car downpayment from your savings and not from your credit card or when you will can pay your taxes on time, without any penalty from the IRS.
Opening a dedicated savings account is the first step to start savings towards expenses that you know will be necessary in the future.
A savings account helps you build that emergency fundWe have seen before that a savings account can help you save for expenses that you know will have to be paid at some point. But what about the expenses that you cannot predict? We have all faced expenses we were not really expecting.
And as an independent worker, if you are not prepared for some type of unexpected expenses, this may force you to either spend a few days without working until you figure out how to gather the money or to look at alternative lending like payday loans or emergency loans. In any case, the interests will be very costly and if you add on top the loss of income you may face, this can put you and your family in a very difficult position.
That's why all the experienced gig workers we talk to mention the necessity to build an emergency fund of at least a few hundred dollars to weather any unexpected expense. A savings account is the easiest way to put money aside and also offers, when combined with a checking account, immediate access to your cash should you need it.
That's a big reason why house of gigs is offering a bundled solution with both a checking and a savings account with instant transfers so you can access your cash immediately should you need it.
A savings account helps you make risk-free moneyDo you know what the national average interest rate is on savings accounts? Take a guess...
According to the latest FDIC research a savings account was on average giving 0.10% APY. So, in other words, if you leave $100 in a savings account for an entire year at 0.09% and you will have an extra 10 cents at the end. Yes, 10 cents. It really sucks, right?
house of gigs worked hard to provide an above average interest rate. And we are happy to say that our interest rate is about 19 times higher than the average at 1.85%. All this with FDIC insurance so your money is safe with us up to $250,000. If we can provide more in the future, we definitely will!
Do you know what the interest rate on your savings account? If you don't, it might be time for you to check with your bank and look for alternatives today!
A savings account helps you become more financially disciplinedFinancial discipline refers to how well you can manage your spending and savings habits. If you can stick to your savings goal and can put aside, say $100 every month, after some time, you may want to save more. And that's where looking at your overall situation can get really interesting.
You probably know that Savings = Income - Expenses. So how do you increase your savings? By either increasing your income or decreasing your expenses. Or better by doing both at the same time!
But which one is the easiest? When you work for platforms, you might say that increasing your income is actually a bit easier. You just need to stay on for a little bit longer. If you can achieve the same hourly pay, then why not? It could make sense if you want to do the extra work. However, if that means accepting lower hourly pay, it's probably not the best solution. In that case, you could check the house of gigs app as we aggregate all gigs in the US and you may want to see if you qualify for higher-paying gigs.
A new savings account alternativehouse of gigs will be launching the first ever mobile bank account this summer. For a grand total of $0, gig workers will have access to a checking account, a VISA debit card and savings account with 1.85% APY. No minimums, no monthly fees, no hidden fees, no overdraft fees. So if you have checked your savings account interest rate and did not like what you saw, here is a simple, free and supportive alternative to you as an independent worker. Join the waitlist today so that you will be the first to know when we go live!
As usual, if you have any comments, feedback or suggestions, we would love to hear from you. Just shoot us an email at [email protected].
The house of gigs team
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