Most people start their financial planning by creating a savings account. This can act as their savings for college fees, a retirement fund or even as their child’s first account. Moreover, this type of account is the easiest to open. In fact, you can create one in only a few minutes.
Although most savings accounts appear the same, they greatly vary in terms of fees and returns. Therefore, before selecting a bank to deposit your hard earned money, it is crucial to research thoroughly on the available investment options so that your principal sum grows substantially over a period of time.
Upon researching a bit, one finds that most banks have a tiered system – the least interest is paid on the smallest amounts. As the invested sum goes up, the interest rate also increases. So, while opening a savings account, the customers should have a clear picture of the current interest rates so that they can calculate the returns in advance. Some banks even provide promotional offers like discounted locker fee and international debit cards for clients who maintain larger bank deposits.
Apart from the traditional banks, there are plenty of online savings institutions. The good thing about online-only banks is that they don’t have physical office or branch which results in reduced maintenance costs. As a result, they provide increased returns on your savings. If you wish to grow your savings account in less time, these are the best option.
After creating an account for a child, showing them the monthly statements and teaching them what they mean can be an excellent way of educating them on managing the financials. The child greatly benefits by knowing how the money is growing. Moreover, this is the most practical method to teach financial discipline from an early age.
Making recurrent deposits of a small sum is the best way to grow your savings account in no time. Often, banks provide an option to schedule the deposits automatically (often from another account). This can be done more easily with online banks. For most people, a weekly deposit of a few dollars may not seem much, but keep in mind that a $10 deposit that is automatically scheduled to happen every week adds up to more than $500 every year.
Overall, a savings bank account can be a very beneficial and practical option for adults as well as for children. With the help of a responsible parent, a child learns the importance of money and how the banking system functions (by opening and monitoring their account).
On the other hand, adults directly benefit from a savings account by earning a substantial interest on the invested sum, over a time period. With careful planning, this account acts as a powerful financial plan which helps you meet specific monetary needs throughout your life.
You never know when the financial market gets hit by recession or inflation. So, having a good amount in a savings account provides security to the lives of your loved ones. When meeting emergency needs, nothing can be compared to liquid cash.
Sourced from: Dugout
Photo by 401(K) 2012 / CC by
