How to Start a Savings Account

                                                                                    

People feel powerless and helpless when they don’t have a savings or retirement account, live paycheck to paycheck or experience a financial crisis. You feel more confident, in control and powerful when you have a savings and/or retirement account - when you don’t have to worry about how you will pay for car repairs or a broken furnace.

People who do not save feel a temporary sense of power when they buy something that they believe shows they are powerful such as a “BMW”, “going on vacation to a Caribbean island or buying a designer item such as Luis Vuitton. However, these feelings erode quickly when the bill arrives – the credit card bill and they go back to feeling powerless. They also experience these feelings because they are treated differently by society. Someone living paycheck to paycheck may go to a liquor store or checking cashing place to cash their paycheck. However, if that same person when to a bank to deposit their paycheck they would have a different experience emotionally.

Nothing last forever and nothing stays the same forever. Life happens and things are constantly changing. Possessing a savings account will help you deal with changes in life much easier than applying for a payday loan because you don’t have a savings account. 

Some benefits of having a savings account are:  overdraft protection, no checking cashing fees, compound interest, cash back rewards for some debit cards, you have more payment options, money available for unexpected expenses.

Set a savings goal, reward yourself when you reach a milestone, and read your statement monthly. Here are 7 easy ways to start saving:

1. Coins.  Save loose change in a jar. The money saved can be put in a high interest online savings account such as Emigrant Direct, ING Orange Account or HSBC.
2. Use automatic deductions. Sometimes it is easier for people to save money if they can't touch it or see it. Setup paycheck deductions or setup automatic transfers to your savings account.
3. Use programs. Use bank or community programs such as: Bank of America Keep the Change, Wells Fargo Way2Save, Individual Development Accounts (IDAs), etc.
4. Online. Open an online savings account that has a higher interest rate than a traditional savings account.
5. Location. Open an account at a bank location that is outside of your work area or local neighborhood to reduce temptation of accessing the account on a regular basis.
6. Separate.  Create several separate savings accounts:  an account for unexpected emergencies, a vacation account, an account to use for home repairs if needed.
7. Contribute regularly. Contributing regularly quickly builds up your account balance and helps you take advantage of compound interest.

How Many Bank Accounts Do You Have

Some experts say less is more and in some cases that is correct but what about bank accounts. Determining how many bank accounts you should have depends on your financial goals: do you want to create an emergency fund, plan for retirement, etc.

You should have at least two bank accounts. If one bank goes out of business or has some type of glitch that prevents you from accessing your money, you will have the other account available. If you have your money in a FDIC insured bank for now you money is insured up to $250,000 temporarily and then the limit will go bank down to $100,000.

Another reason to have more than one account is when traveling, your local bank may not allow you to access money outside of your state so a second account would come in handy. The key is to make sure both accounts operate on separate networks or make sure that at least one account can be accessed nationwide or internationally if you frequently travel overseas.

You can have multiple accounts as long as they remain active and you are disciplined enough to keep track of them. Read your statements each month and verify your balances. If you decide to have a joint bank account verify the balance daily or weekly especially if you spouse does not balance the checkbook or keep receipts. Here are some options you can use to determine how many bank accounts you should have.

How Many Accounts Should You Have
1. Consider location
2. Consider fees
3. What does the bank offers - 24/7 access, after hours customer service, online options, multiple products and services, low or no fees, security protections, multiple locations
4. Watch how they treat their customers
5. Check the bank rating
6. Check the bank's stability
7. Look at future plans (upgrades to service, conversions, future mergers, layoffs, etc.)

You Should Closing Accounts If:
1. You don't know your balance
2. Your account is negative
3. Your balance doesn't grow because of fees you are being charged to keep the account open
4. The interest rate is low or you don't earn any interest
5. You cringe at the thought of going to the bank to make a deposit
6. You forgot you had the account
7. Your original reason for opening the account is no longer valid