So you want to start saving, what’s next? Unlike generations before us, we don’t have the simplicity of just putting the money in mattress. It’s simple but it’s really unsafe—and mattress money don’t make money. We actually have hundreds of options when it comes to how we save, so how do we choose? Here are four questions to help you determine the right savings account for YOU.
1. What Am I Saving For?
If you are just getting started saving and trying to build an emergency fund—you’ll want your savings to be liquid or easily accessible. If you are saving to buy a house in 5 years—you may want to look at some long-term savings vehicles that pay higher interest rates. You might want to do both & keep them in separate accounts. Either way, step one is to be clear about what you are saving for and let that help guide you to the right kind of savings account(s).
2. How much do I have to start the account?
If you have already been saving and are looking to grow it, you will have more options available to you. Many accounts have minimum balances (and fees that occur when you go below), but with that comes the benefit of higher interest rates. If you are starting from scratch, you may want to go with a regular savings account with no fees. Once your balances start growing, and your savings habit is in full force, you can consider other options.
3. What type of accounts does my current financial institution offer?
If you’re happy with your current financial institution, it’s often more convenient and advantageous to have your checking and savings account at the same institution. It allows you to set up easy automatic transfers, see all your accounts in one place via online banking and have the relationship with your banker to help guide you as your money grows. If those options don’t look appealing to you, it might be time to branch out.
4. What fees are associated with the account?
Obviously, you don’t want your savings dwindled by high fees. Be sure to understand any fees associated with the account. Most regular savings account are offered for free, and that’s a good place to start.
The above aren’t the only questions. However, these four will help narrow down your options and determine what type of account will best fit you. You should ask these questions on a regular basis. As your savings grow, you will want to allocate it in different ways, keeping your emergency savings easily accessible and putting your long-term savings in vehicles that allow you to earn money while you sleep. If you want to dive deeper on your savings goals, fill out our interactive online submission to get a personalized action plan from a certified Financial Specialist.