Getting money is exciting, and it can be fun to spend, too. You want to know what else is exciting? Yes? Okay, okay, I’ll tell you. Some other things that are fun are having money for emergencies, having money to live on if you don’t find a job immediately after college, and the potential to really live lavishly in the future. Look, I warned you they were exciting. These exciting things are just some of the benefits of a savings account. A savings account is basically a safer, smarter version of keeping money in or under your mattress. Unlike your mattress, though, a savings account helps your money to accrue interest over time. Six types of savings accounts, according to Forbes, are the traditional savings account (you would generally open at a bank or credit union, they tend to have low interest, they’re easy to open, you may be subject to fees for too many withdrawals), the high-yield savings account (you would open these in an online bank, lower minimum deposit, higher interest rate, may not have access to your money through ATM), the money market account (you can open these either online or a conventional bank, better interest rates than traditional savings accounts, a higher minimum may be required, banks may charge a monthly fee), the certificate of deposit account (you can open these at conventional banks or online banks, typically no monthly maintenance fees, you agree to keep your money in them for a set amount of time, early withdrawal would result in a fee), the cash management account ( you can open these through online brokerages and robo-advisor platforms, more so an account for holding money than saving, convenient way to earn interest on money you plan to invest, you may not have access to branch banking), and the specialty savings account (you can open these through some banks, credit unions, brokerages or investment companies, useful if you have a singular reason for saving money, you may pay low or no maintenance fees, there may be restrictions on who can open them). These accounts are different, so before starting to save, you may want to figure out what you’re saving for and if it will be long term or short. If you want to read more on them, the Forbes article I mentioned earlier will be very helpful. Now that you’ve done a little learning, let’s get back to the exciting things that can come from having a savings account.
- Financial Cushion for After College Life
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As college students, our unfortunate reality is that our degree will not guarantee us a high paying job or a job in general. While making enough money to independently sustain ourselves is the goal, it would be nice if we could still sustain until we get that job opportunity. Saving throughout college would make this possible!
- A Future of Financial Flexibility
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Think about what you would be able to do with all the money you would save if, every once in a while, you passed up on buying those clothes, shoes, phones, or Starbucks. You could put that money in a savings account and help contribute to a future for yourself where you can live comfortably and maybe even lavishly.
- Preparation for the Unexpected
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Sometimes life comes at you fast, and I know this sounds like an insurance commercial, but it’s true. There are a lot of things that could happen from car accidents, injuries or illnesses that could send you to the hospital, or just bad luck that affects you financially. How reassuring would it be to know that you have yourself covered no matter what happens? You may say, “Kierstyn, if I have insurance I won’t have to worry about that.” As cool as Jake and Drake from State Farm are, they’re not going to help you for free, so it’s always good to be able to take care of yourself if need be. Having money saved up can really help you out if you’re ever in a bind.
Savings accounts are important, so if you don’t have one, you should look into them. If you already have one, you should check and make sure that the type of savings account you have is best for your saving intentions. Any short term investments you make now will have nowhere as many benefits as the long term investment you can make into your future by opening and putting a percentage of all of the money you get into a savings account. Savings accounts are the way to go!