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"Savings is Leverage: Cash is King (Queen)" 
byline: Dr. Audrey Reed

At a recent Debt Free Diva Seminar, a participant asked why should I save? With interest rates so low, why should I put my money in the bank?

It is a really good question. What is the advantage of having a savings account, with interest at less than 2% on a good day? 

Savings accounts hold the money that we might normally keep around the house or in a checking account until we decided to buy something with the "you could have saved this" money. Savings accounts will give you the small advantage of interest without the stock market worry. And when you do decide there is another place you want to invest, it is there for plodding along like the tortise, you know the one that won the race.

Going to the bank and setting up a savings account is nurturing. It gives us a lift (almost as good as chocolate or shopping). Saving or investing is like shopping without the bags to carry home. I love to go to the bank and hand over the cash….yes cash, not a check…to nurture me, even if I have a check that could be put right into the savings account I will stand in line twice for the Yummy feeling I get from the cash rich ritual.

$1. I cash the check
$2. I take it over to one of the desks or a cozy chair.
$3. I count the money, put it in order (1's - 100's) and bless each and every dollar bill,
grateful for the abundance.
$4. I then go back to the teller and put my money into my savings account.
$5. I get the receipt in my book, say thank you with a bright smile and I am good to go……
feeling rich and rewarded.

When you are ready to take your money out of the savings account to invest in other ways, you may be surprised how the money has grown. Then invest in your dreams, but keep some liquid funds available for that rainy day, and may it never come…

A pound of prevention is worth an ounce of cure, as my mother said. Yes, I have a mother, too!

This is a habit that lots of affluent people I have interviewed tell me they do. The bank knows who they are, they could be anonymous, they could bank by Internet, but the choose to be recognized as a participant in their money matters. So they show up, act friendly, joke around with the tellers, learn whom the assistant manager and bank manager is, and know them by name and face. 

My friend Rosalee from Austin, Texas says, when I first started to go to the bank and deposit money into my savings account, it was $20 a week. Every week. The bank tellers must have thought it was cute.

Now 30 years later, I have a substantial portfolio, and have developed a great relationship with my bank.  I developed the relationships when there was nothing. Now that there is a substantial portfolio, I am honored to still stand in line, chat with the other customers and tell the teller what a great job they are doing for me. That works! 

How does the savings become leverage?
It is the fuel that allows you to make investments without touching your saved money.
When you have money, you don't necessarily need to give that money to a lender, they will allow you to keep the money in the account or in a Certificate of Deposit (CD) as collateral for the loan or business/personal transaction.

It is like owning a house…..cash is always queen.

Last month, Stella got a line of credit from her bank for $25,0000, for her new business.
She does have $15,000 in her savings account, that the bank had her put into a CD to guarantee the loan. You will notice that she has kept the money and the interest coming into her account. The bank will only take the money and interest if she defaults (does not pay when due) on her line of credit.

Magic! Yes, because we don't normally think like this….. a great way to use OPM (other peoples' money) and keep your own in the bank creating some ROI (return on investment).

Be blessed.

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