You're probably already familiar with how a checking account works—it's what most people use to make day-to-day financial transactions, like depositing paychecks, withdrawing money from an ATM, or setting up automatic debits to pay for the cable bill each month.
But a checking account has another important partner in crime, and that's the savings account. A savings account, like a checking account, lets you keep your money in a safe place.
If used the right way, a savings account can help you curb impulsive, unnecessary spending and meet your long-term goals.
But unlike most checking accounts, you can also earn a small amount of interest each month, and if used the right way, a savings account can help you curb impulsive, unnecessary spending and meet your long-term goals.
Savings accounts are offered at most banks. Like checking accounts, savings accounts are FDIC-insured, meaning the bank insures your money up to $250,000. Basically if the bank goes out of business, you won't risk losing your money up to that amount—making a savings account a safer alternative to stashing your cash under your mattress.
Why should I open up a savings account if my checking account is working just fine?
With such measly returns, you may be asking, "Why should I bother opening up a savings account if my checking account is working just fine?" If you’re looking for ways to save for the future, a savings account could be the missing piece you need to help you avoid overspending and stash away some cash.
By setting up automatic transfers from your checking account to your savings account, you can limit your temptation to spend all of your money at once—and you don't have to think about it every time you want to save money.
Stephanie is the creator of The Empowered Dollar, a website dedicated to helping millennials fix their finances and find their stride in money and life. When she’s not blogging, Stephanie is designing financial education curriculum that teach millennials and low-income families about smart money management.
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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor's own objectives and circumstances.
Teachers Insurance and Annuity Association of America (TIAA) has sponsored this post for information purposes only. Stephanie Halligan is unaffiliated with TIAA, College Retirement Equities Fund, and their affiliates and subsidiaries (collectively TIAA), and TIAA makes no representations regarding the accuracy or completeness of any information on this post or otherwise made available by her. Ms. Halligan’s statements are solely her own and are not endorsed or recommended by TIAA. TIAA does not assume responsibility or liability for the content or privacy policies of external sites. Any opinions expressed thereon do not necessarily reflect the views of TIAA.
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