Checking accounts are ideal for the everyday purchases and easy withdrawals from and ATM at the spur of the moment. Savings accounts are the exact opposite; they help you garner money over time in hopes that it will come in handy on a rainy day. It is essential to know just how much you should have in each account, this way you can avoid fees and any sort of issues in regards to withdrawals or bank fees from having too little money in them.
All About Checking Accounts
Checking accounts are the go-to for taking money out. You can’t take money out of your savings at a moment’s notice because it is in the name: you need it to save!
Minimum Balance Requirements
There are different minimum balance requirements for Savings and Checking Account. Now, checking accounts have this interesting caveat that can cost you significant amounts of money and time. A minimum balance requirement is something that can bite you in the butt if you don’t take it seriously. Depending on your bank, the minimum varies greatly. It depends on your bank, but some checking accounts only require as little as 10 dollars and some require as much as $500. This is a shocking difference but it truly does vary that much. Just make sure that you check with your bank to understand what those minimum balance requirements are exactly.
Covering Your Monthly (Maybe Even Weekly) Subscriptions
There are so many subscriptions to sign up for nowadays that it can be super easy to lose track of them. This can easily creep up on you and drain your checking account. It would be a great idea to list out all your subscriptions for the month. Also, pay attention to which ones make money out on which day this way you can always be sure to have enough money in your account. Don’t let subscriptions take over your checking without you even knowing it!
AutoPay is You Best Friend and Worst Enemy
one of the greatest ideas (in my opinion) of the 21st century is autopay, although there are different requirements for Savings and Checking Account. This invention has converted the fear of missing payments and bills into reassurance that nothing can be missed. However, be extra careful that you know all of your auto-pay settings and that there is ample cushion in your checking to use auto-pay to the best of your ability. This is extremely important otherwise, auto pay could overdraw your checking and quickly become your worst enemy.
The 3 to 5 Week Rule
The 3 to 5-week rule is simple: make sure you have enough in your account for 3 to 5 weeks of spending. This means that the amount you spend in 3 to 5 weeks should be your ample cushion in your checking. This will ensure that if you run into any sudden payments where you are swiping your card without realizing it, then you will be A-ok. Having more than 5 weeks is okay but it would be better to put that money away in a savings account this way, you won’t be tempted to spend it.
All About Savings Accounts
Now, we have all heard that it is important to start saving early. But truly, how important is it and why is it way easier said than done? We are going to cover how to save and how much you should be putting away for a rainy day.
One of my favorite bank tools of the 21st century is automatic transfers. These types of transfers sound intimidating but they can help you reach your saving goals quicker. Transferring money automatically is a repeated amount that goes from your checking to your savings maybe every day, week, or month. It all depends on what you can handle whether that is 5 dollars, 50 dollars, or 200 dollars. The automatic transfer system can be set up through online banking or through your bank itself. It is the perfect way to save without even knowing.
What Is The Magic Number To Have In My Savings
There is no one “number” that will make you the budgeting genius but starting with a number around $1000 is about right. This means that if you have debt and other things, you should focus on having that $1000 and try not to go lower than that number. You never know when that $1000 could become your money lifeline.
Is There Ever Too Much To Have In My Savings?
This question seems ridiculous at first glance but you will be surprised. Yes, you can have too much money in savings. It sounds silly but hears me out. It is important to save your money but it is just as important to invest if you can. Investing your money allows for an automatic accumulation that you won’t even have to touch to make grow. Extra money sitting in your savings is doing nothing (unless you have a high yield savings account).
Retirement Savings Accounts Are a Whole Other Ball Game
There is the emergency fund savings account and then if you can do so, you should have a retirement savings account that you should focus on. The retirement savings account can be where you directly transfer monthly payments from your checking to your savings. Approximately 15 percent of your monthly income should go into your retirement savings account. This is ideal and the results will be promising over time. So for example, someone who has an income of $100,000 will put away around $15,000 into their retirement savings account.
Saving money is exciting and takes a bit of strategy to figure out. However, working with your budget to figure out how much belongs in each account is a great first step to financial literacy. It can be overwhelming when you feel like you don’t know what you are doing but there is no perfect financial guru out there. Everyone has to start learning from the very beginning at some point.