When it comes to money, the issue of having savings comes up a lot. And for good reason, because it’s a hugely important topic.
But the problem is, many people’s saving accounts get tapped into or emptied every few months for emergencies. So what we need (beyond just a better definition for an emergecy!), is a better way to keep your savings accounts secure so that you aren’t using them so regularly. So let’s talk about the easiest thing you can do to uplevel your savings game.
When your savings is too conveniently connected to your checking account, it’s both awesome and problematic. It’s amazing because, if there’s going to be an overdraft, you can just log on to the mobile app or website and click. Just like that, you’ve moved money from your savings account into your checking to cover the issue.
Only, you shouldn’t be doing that for two reasons. First of all, overdrafts aren’t something you should use. And secondly, your savings is far too easy to access.
So here’s what you can do: set up your savings account to a less convenient bank or credit union. More on that in a minute. First, though, let’s talk about why you should do this.
When your emergency savings account is too convenient, it becomes easy to justify and rationalize dipping into it on a regular basis. And then, bit by bit (or all at once), your savings gets emptied right on out.
Then you’re back to square one of needing to build a savings account.
So if you can move your primary savings to somewhere that’s harder to reach, you’re going to have to do more planning.
It will give you that extra moment to think, wait – do I really need this money? Is this really an emergency?
Because if the money is in another account at another institution, it’s going to take 2 to 3 business days to transfer it. And that buffer will help you keep your savings more secure for actual emergencies.
Now, when an emergency does occur, you’ll still have access to your money. You may even have a card you can use to access it. You’ve still got it. But that buffer helps you keep it safe for that emergency – rather than using it to cover impulse purchases that probably shouldn’t have happened in the first place.
So, where can you go to set up this harder-to-access savings account? I recommend you go to an online bank – one that doesn’t have a brick-and-mortar building. That way, you can’t just pop in to the bank to withdraw some money. You’re well and truly stuck waiting for that transfer. And that’ll help you keep your savings more secure – and ready for an emergency!
You can set up a dedicated savings account at places like Capital One 360 or Ally.com. If you do business with eTrade, they have their own banks, too. Discover could be another option.
And if you go to the website bankrate.com, that will help you compare account types, options, and more. It’s a great resource to have on hand, especially when it comes to making any banking institution type decisions.
So now you know why you need a different, dedicated savings account – to keep your money safe from yourself. And you’ve got a handful of places to go to set that up. And to help you save money even smarter, here are a few more articles to get you going on your path to financial freedom.