Money Basics

Investing in your future: savings accounts

November 3, 2020

Whether it’s for a specific purpose or to build an emergency fund, saving money can alleviate stress and lead to a financially fit lifestyle. And with all the uncertainty 2020 has brought us, it’s a good idea to have some savings to cover unexpected expenses or a reduction in your income.

Start with developing short and long-term saving goals to promote healthy spending and saving habits. Whether it’s saving for a home, vehicle, education or splurging on something fun, setting these goals can help you commit to saving.

Savings accounts are also beneficial if you’re tempted to spend savings that you normally keep in a checking account. Savings accounts usually have limits on the number of withdrawals per month, which can be a good motivator not to touch the money unless you really need it.

Next figure out how much you want to save each month. If you have a specific dollar amount in mind – a new TV for example – take the total amount divided by twelve. This will give you the amount you need to save each month in order to purchase the TV in a year. If that number isn’t doable right now, adjust the number of months until it’s something more comfortable for your budget, but attainable. You can also use the 50-30-20 rule, which recommends that you spend 50% of income on needs, 30% on wants, and 20% on savings or debts.

Savings accounts make it possible to earn money just by having your money in the right account. If you choose to deposit your money into a savings account, you are essentially acting as a lender to the bank. In return, the bank will pay you interest, or a percentage of your balance, to keep your money with them. Depending on the amount you choose to deposit and varying interest rates available, you can personalize your saving experience with a savings account that offers the greatest yield and overall benefits. 

All that’s left is for you to open the account! Procedures may vary by individual financial institution, but as a guideline, use this checklist to help you prepare to open a checking or savings account:

  1. Do your research.
  2. Visit your financial institution.
  3. Bring two forms of identification.
  4. Provide personal details.
  5. Bring money to make your first deposit.
    For joint accounts or minor accounts, provide personal information and identification for each person who will use the account.

Learn more about savings accounts and how to open one for yourself or your child with our online tutorial.

This information is presented for educational purposes only. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

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