While most people in the world have a general understanding of where their money is and how to save, there are many who do not have any money set aside for emergencies and are living paycheck to paycheck. If you already know that you should be doing more with your money than putting it into a free checking account and spending it directly from there, then it’s time you sit down with an expert banker or advisor to talk about your unique situation and your needs. Even if you have never considered opening a savings account, there are a number of benefits to having one.
You’ll Have Money in Emergencies
While you may think that you have the self-control necessary not to spend all of the money that’s in your checking account, studies have shown that most people do not. Instead of being able to leave a buffer in their account, most people spend almost every penny that they have. If it’s in checking and accessible with a debit card, it is just too easy to spend, which is why opening a basic savings account is a great idea. This no-frills account will protect your money from being spent and allow you to grow a small savings in case of emergencies.
Rather than trying to take out a loan or beg your friends or parents for money when your car breaks down, you have to pay for unexpected medical bills, or you need to buy new books for school, a savings account will ensure that you have the money you need, when you need it.
You’ll Earn a Little Interest
While savings accounts won’t gain a lot of interest when compared to stocks, bonds, or even money market accounts, it’s still nice to get a little something from the bank. That small amount of interest may be just what you need to stay inspired to keep adding money to your savings account each month. When you have a large sum in your account, you will need to talk to a banker about possibly buying a CD or opening a higher yield account. While this will make your money even less accessible, you will be earning more on it.
It Can Act as Protection
It happens to everyone – you think you have more money in your checking account than you do and you overspend. Rather than being slapped with large fees, some banks will allow you to link your savings account to your checking account as overdraft protection. This can save you a lot of money over time, but you do have to watch out that you don’t go over your withdrawal limits on your savings account, as this can trigger a fee as well.
When you’re ready to take control of your finances and begin growing your wealth then it’s time to head to your local bank and open a savings account. More than just giving you a place to put your money, this will give you peace of mind.