There are many uses and benefits of opening a savings account. Parents often open savings accounts for their children to give them a financial head start. Savings accounts can also be used to prepare for big purchases or large investments. Learning to maximize the value of a savings account can help individuals better prepare for the future.
Make It A Habit
Setting goals can help individuals more consistently and effectively contribute to their savings accounts. One common piece of saving advice is to develop a saving habit; some individuals find that automating a monthly contribution to their savings account is the easiest way to accomplish this, while others may set monthly or yearly contribution goals to allow for more flexibility. Whatever the method, establishing the habit of contributing to a savings account will ultimately be beneficial.
Find Balance
Contributing to a savings account on a regular basis is a productive tactic as it allows individuals to continually grow their funds and increase the amount that they will have over time. However, it is important for contributors to find an appropriate balance between how much they add to their savings accounts and how much they leave in their checking accounts. Adding too much at once to a savings account can pose a problem if there is not enough left over to account for bills or unexpected expenses. Conversely, adding too little to the account means that, over time, the savings account will not be worth as much as it could be, potentially resulting in a loss of opportunities for the saver.
Should You Keep Accounts Separate?
Most banks offer checking and savings accounts, so individuals may be tempted to open both with the same bank because it is convenient. This convenience, however, can be detrimental, as transferring money between accounts becomes remarkably easy. While this practice can be helpful for moving extra funds from a checking account to a savings account, it also becomes tempting for individuals to pull funds from their savings account on impulse thus impeding the ability to reach the savings goal.. However, some financial institutions offer a better interest rate if you have multiple types of accounts. Be sure to consider online banks which may offer a higher rate. When opening your savings account, it is smart to consider all options including money market accounts.
Maintaining a savings account is an excellent way to accumulate money for future use. Automate your savings habit for convenience and shop around to be sure you have the best available account for you.
Securities and Investment Advisory Services offered through Essex Financial Services, Inc., a Registered Investment Advisor, Member FINRA, SIPC. A subsidiary of Essex Savings Bank. The securities and insurance products offered through Essex Financial Services, Inc. are not a deposit of, or other obligation of, or guaranteed by any bank, or an affiliate of any bank, are not insured by the FDIC or any other agency of the United States, the Bank or an affiliate of the bank and involve investment risk, including the possibility of a loss of the principal amount invested.