There are many ways to manage your money, and you may ask yourself if you even need a savings account – especially if you already have a checking account. While a savings account may not be the most glamourous piece of your financial plan, it is one of the safest and easiest ways to manage your money and potentially grow your wealth over time.
What is a Savings Account?
A savings account is an interest-bearing deposit account. Unlike a checking account that is used for day-to-day transactions, savings accounts are typically used to store money. People use savings accounts to put money away for emergencies or for big purchases such as a vacation or a down payment on a car or home.
Why You Should Have a Savings Account
There are several benefits to having a savings account:
Your Money is Insured
If you open a savings account with a financial institution that is a member of the Federal Deposit Insurance Corporation (FDIC), the first $250,000 you save is automatically insured if your bank goes out of business. This is not the case with other types of investments such as stocks and bonds.
You’ll Earn Interest on Your Money
Banks pay interest on the money you put into savings accounts. Unlike other investments, you will never lose money by having a savings account (unless you take money out of the account, of course).The interest earned on your savings account may not be as impressive as gains on a stock, for example, but a savings account offers steady and reliable growth.
The Money is Always Available
Most savings accounts can be accessed by ATM, digital banking tools, or a physical trip to the bank. That’s not true for other investments or saving tools such as CDs and stocks. Keep in mind that some banks will limit the number of transactions you can make each month from your saving account.
Curbs the Temptation to Spend Money
Even though you can easily access the money in your savings account, keeping your money there makes spending less tempting than if you had the cash in your wallet or in a checking account. It’s a great “out of sight, out of mind” way to manage your spending.
You Can Automate Your Savings
You can set up automatic deposits to add money to your savings account on a regular basis. This is especially easy to do if you have your savings account and checking account at the same bank. By linking those two accounts, you can schedule regular deposits from checking into savings as part of your saving plan. It’s also a convenient way to transfer excess money in your checking account to your savings.
A savings account is a great tool to have in your financial plan. It’s a low risk investment that does not require a lot of effort and can come in handy when unexpected expenses arise.
Learn more about savings accounts at Bar Harbor Bank & Trust at https://www.barharbor.bank/personal/savings/savings-account or speak to a banker at any of our branch locations.
Have questions or need assistance?
If you have questions about this topic or need assistance with your banking needs, please speak to one of our knowledgeable staff at your local Bar Harbor Bank & Trust branch. We’re here to help you build a solid financial future.
