Your Destination: A basic savings account is a way for you to deposit your money and withdraw at any time. For example, if you want to save 10% of your income on a regular basis, you can deposit that money in a savings account. If you also have a checking account, you can arrange for your bank to automatically transfer that 10% from the checking account to the savings account.
Travel Kit: See Sample Savings Account Bank Statement handout. Look at the interest for each account and consider if you want to save money long term or short term. Look at all the basic accounts and choose which one is the best for you based on your goal.
On the Path: Learn about the different ways to save. Complete the handout.
Step 1: Regular savings account – It is easy to open a regular savings account at a bank or even online. With this type of account, you can deposit as little or as much money as you want; however, the opening amount to set up the account may be determined by the bank. You can deposit funds either in person or online and you can also withdraw anytime because your funds are liquid. You may be able to earn interest, but it is a good idea to shop around for the best interest rates. Be aware that interest rates will change depending on the economy. However, this is a safe place to store your money for future use.
Step 2: A high yield savings account – these accounts typically pay a higher rate of interest than a regular savings account, but may carry various restrictions, such as limiting your withdrawals to a limited number of times you can withdraw a year. Sometimes banks will provide a reward for transferring a certain amount into a recurring or regular payment schedule. Because you are building up your funds, this may be an option for a long-term goal.
Step 3: CD (Certificate of Deposit) CD’s offer another way to build your savings. CD’s typically pay a higher yield than traditional savings accounts, but you must keep your money in the CD for a specified number of months or years, or there will be a penalty for early withdrawal. Time periods can vary from a little as 3 months to many years. The longer the term, the higher the interest rate will be. If you know you won’t need the money for the term of the CD, then that may be a good place to save for longer-term goals. It may not be the best place to store your emergency fund or any money that you might need to access in the short term.
Extend Your Journey: Open an account and track your savings.
Learn new vocabulary:
Deposit – put or set down; in this case, add money to an account
Interest – money paid regularly at a particular rate
Liquid/liquidity – the availability of liquid assets to a market or company. Withdraw – take something away; in this case, take money out of the account
Yield – Earnings generated and realized on an investment over a particular period.
Resources and Visual Aids: https://artsphere.org/blog/bank-statement-handout/