This story begins on a happy financial note. You have just received notice that you are going to be rewarded for your strong performance at work. Finally your commitment to hard work will mean more money rather than just a lot of “atta boys”. The raise is a good one as well. You calculate that it will mean about $75.00 clear per bimonthly paycheck. 

The raise also comes at a time when you are paying off a revolving charge account bill and you are expecting a sizeable tax refund. You think that it doesn’t get much better than this and, of course, you start thinking about how to spend your windfall.  Many possible options come to mind including that new leather coat you have admired, a new flat screen television, or that iPod, perhaps replacing those old tires on your car, and the mind goes wild with possible purchases. After, what seems to be a long time of mental shopping, reality sets in and the possibility of getting a savings account comes to mind. You have had a savings account before, but it was closed a long time ago when you thought you needed all of your cash just to survive.

The stage is set. Just thinking about the possibility of having a savings account will place a cloud over any purchase you make until the savings account question is settled. Just forgetting about savings is not an option because you are reminded about saving plan options when you watch television, go online to do your banking transactions, walking  into a bank or credit union, and of course talking to family members.

The savings account question is relatively straight forward. If the answer is yes, however, more questions need to be addressed including what type of account, how much should be saved, and what financial institution will service it. These complimentary questions add some complexity to the decision, but for most, the major choice involves having or not having a specified savings account.

WHAT SHOULD BE DONE? It is time for the decision making guide to help you make the best choice. Note that as you go through the guide you are going to be thinking both short term and long term. It is easy to think in the short term relative to over a longer period of time. The longer the time horizon the less confident you are of the accuracy of your thoughts. Someone once said “in the long run we are all dead” and as morbid as that sounds it does help frame short and long term perspectives as people make choices. 

In addition, the question is influenced by the amount you choose to save.  To a certain extent, you can have it all with this question as you can save some of your windfall and spend some. In addition, the savings account question is one of weighing the consequences of one choice in comparison to another. The result is interesting as a decision to save in a traditional insured account does not preclude spending at a later date. Spending now, however, eliminates the possibility of saving that money later.


Applications Insights Guide - click here for facts to aid your decision making process