As Warren Buffet always says “Do not save what you have after spending. Instead, spend what you have after saving,” and that is a great philosophy to live by if you’re trying to save more money.
One of the best ways to start getting into the habit of saving money is to open a savings account.
Simply, savings accounts are accounts offered at most banks and credit unions that allow you to deposit money, keep it safe, and withdraw it during certain period of time.
Most banking institutions will pay a significant amount of interest on the amount you have in your savings account, but not all will pay as much as others.
To help you start off on the right foot, make sure you see if your bank offers any high-interest Savings accounts with super high yield options that are more high maintenance and take time and patience to deal with.
However, this work pays off with the amount of earnings you can accumulate. Below we will go over some Reasons Why You Should Have a Savings Account.
American Express® High Yield Savings Account - You earn 0.60% interest rate along with no minimum deposits or monthly fees. Amex High Yield Savings account has been my favorite Hub account for the past 5 years. Using this account to Pull/Push your money is absolutely necessary when you have many accounts. Here's why:
*No dollar limitations for ACH transfers - When you find a top bank rate account, you don't want to be limited to just $5K or $10K transfers. Amex Savings will let you transfers as much as you want whether you are pulling or pushing money from and to an external bank account.
*1 to 2 business days ACH transfers speed - With top-notch user interface, you get your money to another external account or pull money from another bank account within a day or two.
*No loss of interest during transfers - On the day you initiate your transaction on the high yield savings account website, the funds will be reflected in your Current Balance and begin earning interest.
Some other features from American Express High Yield Savings Account include Free Wire Transfers, 3 maximum linked accounts, and maximum 6 ACH withdrawals per month.
Savings account offers are frequently updated. Find the best nationwide Savings/Money Market rates here, and the best Savings account bonuses here. The Axos Bank and CIT Bank accounts offer great rates available nationwide which I recommend.
|Chase SavingsSM||$150 Cash||Review|
|Axos My Savings Builder||Up to 0.70% APY||Review|
|Axos Bank High Yield Savings||0.61% APY||Review|
|Axos Bank High Yield Money Market||0.60% APY||Review|
|American Express High Yield Savings||0.60% APY||Review|
|CIT Bank Money Market||0.55% APY||Review|
|Discover Bank Online Savings||0.50% APY||Review|
Table of Contents
- 1 Savings Accounts are Easy to Open and Cheap to Operate
- 2 Having a Savings Account Nurtures Good Financial Habits
- 3 A Safe Place to Keep and Access Your Money
- 4 An Easy Accrual Account
- 5 An Excellent Way to Save for Major Purchases and Vacations
- 6 A Must Have Cash Reserve for an Emergency or Opportunity
- 7 Bottom Line
Savings Accounts are Easy to Open and Cheap to Operate
Normally, banks will only require the customer to have $25 to open a savings account. Some banking institutions will even have no minimum opening balance.
So you can start a savings account with no money at all and gradually add money into the account to start getting some earnings. Banks that do this are mostly online banks, community banks, and credit unions.
To open a savings account, all you will need is some form of government authenticated form of identification such as a driver’s license, Social Security number, or a military I.D.
Then, you will decide which bank or credit union you want to open the account at and go in branch or online to set the account up. The best part is that it is relatively inexpensive to maintain because most banks will waive the $4 to $5 monthly fee as long as you keep a healthy monthly balance.
Having a Savings Account Nurtures Good Financial Habits
If you already have a checking account at your local bank, then setting up a savings account will be a breeze because your local bank will allow you to set up automatic transfers from you checking account to your savings account.
You even have the option of scheduling such activities as frequently and as much as you’re comfortable with. With this method, you can save money at your own pace and not even have to think about it.
The more you put aside towards your bank account, you’re already becoming a better saver.
Once you start getting into saving you’ll start receiving the benefits of working with budgets, tracking your expenditures, financial planning as well as the benefits of compound interest.
Simply by opening a savings account, you are already saving some of your earnings. You are less likely to spend money from your savings account because they do not have a debit card or checks.
Also, the bank restricts the frequency that you withdraw money from the account, so it helps protect from any temptations you might have.
A Safe Place to Keep and Access Your Money
Not only are they easy to operate and set up, but they are also very secure. It is more safe to keep your money in a bank account than it is to keep it in some secret spot in the house or a risky investment fund.
Listen to this, you’re receiving money from the bank simply by keeping a certain balance in your account with them. How great is that?
The good news doesn’t stop there because the Federal Government will insure your money’s safety up to $250,000 through the Federal Deposit Insurance Corporation.
There are obvious risks in keeping a large amount of money in our wallets or stashing it in some secret location in your home, but it could quickly get stolen or forgotten about.
It is best to hold on to your money instead of investing in risky ventures such as stocks and bonds. Unlike a savings account, they aren’t protected by the Federal Deposit Insurance Corporation (FDIC).
An Easy Accrual Account
One of the most common and practical things to have this type of account is as an accrual account. Use a savings account to handle large payments that are too big to fit into a one-month paycheck.
Payments such as car insurance, homeowners insurance, and real estate taxes are made once every six months.
Although there are services that can help bring the cost of your insurance significantly, the final tab can still exceed your monthly budget. Insurance companies will offer a “solution” by separating your payment into monthly payments, but it comes with a costly fee.
Instead of following through with the insurance companies’ monthly payments, set aside money per week to make the payment as a whole. When the time comes to make the payment, you will be able to make the payment without any worries.
An Excellent Way to Save for Major Purchases and Vacations
Since we’re talking about making big purchases. One of the best purchases you can ever make for yourself, besides a home, is a vacation! Both are expensive in their own right.
Whenever you’re thinking about making a big purchase, financiers will expect you to pay 10 to 20 percent upfront.
This is where a savings account can come in handy because you can accumulate, store, and grow your savings to match that amount.
Following this method along with having financial discipline will allow you to pay off any big purchase you might do in little to no time.
Additionally, you’ll still be able to enjoy yourself because you saved so much money for the big purchase.
A Must Have Cash Reserve for an Emergency or Opportunity
Whether it be for an emergency or an opportunity, the fact that you have cash available to aid you in any unforeseen event feels good.
It could happen at any moment in time, and your savings account can cushion you from whatever emergency comes up.
Advisers will tell you to have at least six months worth of your expenses saved up. That will be the amount that will keep you stable if a major expense or circumstance were to occur.
From medical expenses to making a big purchase at a huge bargain, your savings account can see to it that you get what you need.
Still deciding on whether you want a savings account? Well stop thinking about it and go for it. The benefits are endless and at the end of the day, it can only help you to start saving.
Long term, it will help you, one day, make that big purchase that will send you into another chapter in your life.
For now though, it will help you learn how to manage your expenses and become financially smarter. If you’re interested in posts like this, be sure to check out the Best Bank Rates and Best CD Rates for you, here on HMB!