If you’re well versed in finance or politics, chances are you’ve heard of the term ‘rainy day fund.’ If you haven’t, I’m sorry to say that this isn’t the fund you pull from to go shopping on a rainy day. Whether you own your own business or want to better prepare for the future, everyone needs to practice a form of financial protection. That is the purpose of a rainy day fund: to help deal with budget shortfalls when your revenue does not match your expenditures.
As a business owner, the best form of financial protection is to set aside money in a business savings account. This emergency fund is similar to taking out an insurance policy on yourself: you are setting aside profit for the future in the event you run into legal issues, stumble upon the need to expense more than you bring in, or your sales don’t meet projected goals.
Here are two money-saving opportunities that you can invest in to insure you’re prepared for the unexpected:
1. Money Market Account: This is a high-yield savings plan that is offered by banks and credit unions. A money market makes funds easy to access and pays higher rates than a typical checking account. This type of account has a higher minimum balance, only allows three to six withdrawals per month, and permits owners to write up to three checks per month.
2. Certificates of Deposit (CD’s): This low-risk and low-return investment is great for cash you don’t need for months or years, and is one of the safest investments a person can make. By leaving your money untouched during the investment period, the bank will pay an interest rate slightly higher than what you would have typically earned in a money market or checking account. All gains in CD’s are taxable income. Plus, you are guaranteed to get back what you put in, plus interest once the CD matures.
Telhio is open to anyone who lives, works, worships or goes to school in Franklin, Fairfield, Delaware, Licking, Madison, Pickaway, Union, Hamilton, Warren, Butler and Preble counties. This credit union is federally insured by the National Credit Union Administration. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company. Copyright 2003-2017 Telhio Credit Union, 96 N. Fourth St., Columbus, OH 43215. All Rights Reserved. Deposit accounts at different divisions are part of Telhio Credit Union. Deposits held at each office are not separately insured. NMLS #251831.