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|A revolving savings account is seldom talked about and seldom mentioned. Yet, this is your #1 savings account your household should
have in place. A revolving savings account is your first line of defense against the everyday, every-week small nagging things that take
Our definition of a Revolving Savings account:
A passbook savings account linked to your checking account with a “waterline” balance of 20% of your monthly gross income, which is your pay before taxes and allotments are taken out. The account balance will fluctuate from week to week, month to month. This is not your emergency account but your first line of defense to keep you from using your emergency account.
A revolving savings account is used for:
Example of how much a revolving savings account should be: Household monthly gross income is $4,200 X .20 = $840, So, $840 is the waterline goal for your revolving savings account based on your current monthly gross income; pretty simple right?
Tip: Four months before the holidays, August you may consider increasing your revolving savings account in preparation for the up- coming holidays. Add a cushion as the holidays always cost more than we expect, or budget for.
A revolving savings account keeps you from tapping your emergency savings, as an emergency savings account is for true emergencies, such as the loss of a job or major car repair.
Start building a revolving savings account today. Simply start saving $10, $20, $50 per paycheck and placing into a passbook savings account that is linked to your checking account.
We hope you get the gist of what a revolving savings account is, and the importance of having one in place. Without a revolving savings account most household never truly have an emergency account-that is saved and used for actual emergencies.
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