In the old days people would hide all their money under their mattress 🛏️. While it is a good idea to keep some cash on hand (under the mattress or elsewhere), we have slightly more sophisticated methods now to store your money.
A savings account is something everyone should have. It is where you keep your money that you do not intend to use, unless it is an emergency. Money may continually flow in to your savings but it is not designed for money to be flowing out consistently. That is where you would use a checking account instead.
There are multiple types of savings account. A regular savings account is one you can open with your bank and is the most common. A high yield savings account is mostly offered by online banks and boasts higher interest rates compared to a regular account. There are also money market accounts which offer higher interest rates, and it also acts like a checking account where you may write checks and have a debit card attached. The caveat with money market accounts is they typically require a higher minimum balance.
Whatever type you have, there are many benefits tied to a savings account. They are generally safe places to store your money and as mentioned, generate some interest. Your money is easily accessible in emergency situations. Additionally, your savings is backed by the government via deposit insurance, in case the bank was to fail.
MMM tip: Do you know how much interest you earn in your savings account? Could you get a higher rate elsewhere?
Until next week!
Dariene
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Disclaimer: This newsletter is for informational and educational purposes only and should not be considered financial, investment, tax, or legal advice. I am not a licensed financial advisor. Please consult a qualified professional before making any financial decisions.
