Saving money is important, but it can be a challenge. Opening a savings account lets you store your money while earning interest or dividends. Though some may find savings an old-fashioned concept, here are five reasons why opening this type of account is still a smart move.
- Withdrawal Limits Help You Build Savings
Government regulations limit preauthorized withdrawals or transfers from savings to only six times per month. While this might seem like a nuisance, this withdrawal limit helps you avoid temptation once you set aside money that you don’t want to spend.
- Your Account is Protected by the Federal Government
Unlike with a questionable investment, the money in your account can never be lost. The National Credit Union Administration (NCUA) will insure the entire amount in your account up to $250,000.
- A Savings Account Helps You Accrue Money for a Rainy Day
This type of account is designed to help you save, and accrue interest on, money that you might need for an emergency. As your funds grow, you’ll have a better safety net if you’re facing an unfortunate event, such as an unexpected repair bill or a job loss.
- Pairing Your Savings and Checking Accounts Helps You Save More
You can link your savings and checking accounts in order to automatically transfer money from your paycheck into your savings. Sending money directly like this can help you save more than you otherwise might.
- A Savings Account Helps You Stay Out of Debt
Consider your savings a “planning account.” It lets you budget money for big-ticket items over a series of months. Want to buy a new car? Save for it. Want that new television set? Set aside money. Instead of buying more expensive items on credit, you can save up for them by stockpiling money in your savings each month.
A savings account is still one of the best ways to grow your money for mid- and long-term goals.