Saving money is something everyone should be doing regularly. Even if you don’t make a lot, tucking away some of it each time you are paid will make your life easier. Part of your savings plan is finding the right savings account for your family and add it to the budget.
According to studies, millions of Americans are not creating a nest egg, and that’s a little stressful. Planning ahead for retirement, your kids’ college funds, a new home, and even vacations will make your life more enjoyable. If you set aside just $5 a week, you’d have $260 at the end of the year. You’ll probably want to save more than that, but if you are a beginner, you’ve got to start somewhere.
Whether you save $5 a week or $50, you need to put it in an account that helps you accumulate more savings. That’s right. Whether you are looking for a savings account in Hawaii, Florida, or one of the other 48 states, you can find one that works for you.
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How Savings and Checking Accounts Differ
When you start saving your money, there’s a specific kind of bank account you’ll want to open. While you could use a checking account to save, it isn’t going to help you at all. Your cash will just sit there.
Instead, you’ll want to open a savings account. This kind of account will not just hold your money, but you can earn as much as 2% interest by just adding it to your account. Up to $250,000 is federally secured, meaning that if something happens to the bank, the federal government will step in and give you the money you lost.
Keep in mind that you don’t want to hold more than what’s federally secured in any one account.
Another reason to put your money in different accounts is that you’ll be less likely to spend your savings if it’s not in your checking account. You could even set up different savings accounts for individual goals. For example, you could open one for a vacation fund and another for an emergency fund.
Decide What Type of Savings Account You Need
Not only are there distinct accounts for savings and checking there are different types of accounts to save a portion of your income.
Here are some of your options:
- Savings deposit accounts that you can withdraw money from any time you want but only up to six times a month.
- Reward accounts will give you incentives when you meet specific savings goals.
- Student savings accounts for college students. Many times these accounts are more flexible.
- Jumbo savings accounts are for people who are going to make large deposits like $100,000 or more. These deposits often earn higher interest.
- High-interest savings accounts pay more interest on your money but usually have strict terms and higher minimum requirements.
Check What They Are Offering
After you’ve figured out what kind of savings account will work best for you and your family, it’s time to shop around.
Make sure you’re aware of the fees associated with your account. For example, some banks charge monthly fees and require you to keep a certain amount in the account at all times, or you’ll have to pay a penalty. If possible, you want to open your account at a bank that doesn’t do those things.
Interest rates will vary between financial institutions as well. You want the highest rate that you can find as long as everything else meets your needs.
Don’t Be Afraid to Shop Around
Picking a savings account is simple, but you do want to make sure the bank you choose is taking care of you. So, don’t just pick the first one. Shop around. Check with big banks, local ones, and credit unions.
Good luck and happy saving!