Expert Bola Sokunbi: Here’s What To Do When You Have $1,000 in a Savings Account
Bola Sokunbi, author and founder and CEO of the Clever Girl Finance personal finance platform, learned the importance of financial security early on in life. Sokunbi made it a goal to create a financial safety net for herself and was able to save her first $100,000 in just under three years while earning a salary of $54,000.
Achieving this requires a lot of discipline, so Sokunbi acknowledges that it’s OK to start smaller. Sokunbi, who is one of GOBankingRates’ Money’s Most Influential Women, shared her best advice for saving your first $1,000 and what to do after you achieve this milestone.
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Why You Need at Least $1,000 in a Savings Account
Sokunbi believes that everyone needs to have money set aside in savings to act as an emergency fund.
“It’s smart to have an emergency fund stashed away that’s enough to cover your essential living expenses — housing, food, transportation, medicine — for about three to six months,” she told GOBankingRates. “Think of it as your financial safety net for those unexpected bumps in the road, like surprise expenses or a sudden drop in income. It can really help ease the stress when life throws you a curveball.”
Three to six months’ worth of expenses can seem daunting, so Sokunbi said to set a smaller goal to start.
“If you don’t have an emergency fund set up, focus on getting your first $1,000 in place,” she said. “Then, add a line item to your budget for emergency savings so you can keep saving consistently each time you get paid.”
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How To Keep Up With Your Savings Goals
Once you have $1,000 in a savings account, it’s important to keep adding to it until you’ve built a sufficient emergency fund. To ensure you meet this goal, automate the process, Sokunbi said.
“When you automate saving money, you don’t have to think before you save or have any mental debates with yourself about whether you should save or not,” she said. “Additionally, when you automate your savings, you are more likely to save more money over time than if you had to make the manual transfers yourself.”
What To Do After You’ve Built Your Emergency Fund
Once you’ve established an emergency fund, move those automatic contributions from savings to investments.
“Start investing, be it in your employer’s retirement savings plan or by opening up your own IRA or non-retirement brokerage account,” Sokunbi said. “The way you build wealth is by putting your money to work for you. And when invested, your money grows through the power of appreciation, compounding and dividends. You don’t need a ton of money to get started and you can automate transfers to your investment accounts each time you get paid.”
Jaime Catmull contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Expert Bola Sokunbi: Here’s What To Do When You Have $1,000 in a Savings Account
