Grow Your Savings By Separating Accounts
Whether you’re great at managing your money or bad at it, chances are that you have room for improvement. Accelerate your savings goals while staying on top of routine expenses when you establish two different accounts for your spending and savings.
Unique Benefits of Each Type of Account
Both accounts have distinct characteristics with the main difference being the accessibility of your funds. Checking accounts typically earn no or little interest, so they’re more conducive for withdrawing money and paying bills. Another bonus is that they tend to have no monthly fees. You also have access to ATM networks.
Savings accounts often have a limit on the number of withdrawals you can make during a month and yield higher interest, which gives you an incentive to keep your hands off of your funds. The higher the APY, the faster you’ll grow your money.
Advantages of Keeping Separate Accounts
The main benefit of keeping the two accounts separate is to avoid the temptation of dipping into your savings for non-emergency items. It’s a way to protect yourself from yourself.
Another key advantage is that having a designated savings account can make it easier to budget for major expenses during the year such as property tax or vacation. Setting aside money each month to grow the savings account is a good way to prepare so that when these events happen, you’ll have enough funds to cover the costs.
Ways to Get the Most Out of Your Checking and Savings Accounts
While establishing two different accounts for spending and saving is a good place to start, there are other strategies you can implement to cultivate healthy finances such as opening separate savings accounts for each of your savings goals. For instance, a savings account for travel goals and another for emergency savings. This lets you withdraw funds from that one account instead of dipping into your emergency savings.
You can also take advantage of automatic payments by setting up automatic monthly transfers from your checking to your savings account. It’s a simple way to prioritize savings goals, especially if you’re forgetful and busy and could use this convenient tool to keep you on track.
By implementing these strategies, you’re well on your way to being more disciplined with saving so you can achieve your financial goals faster without going into debt.