Shumate – 5 th Period

 A savings account is a bank account that earns interest over time.  It allows consumers to store excess cash in a secure location, also while earning interest on the balance.  The Federal Reserve Board’s Regulation D mandates that a depositor may make no more than six transfers/ withdrawals out of a savings account per month.

 They allow you to keep your money in a safe place while it earns a small amount of interest each month.  The accounts usually require either a low minimum balance, like $25 or may require no minimum balance at all. This depends on the bank and the type of account.  When you put your money into a savings account, it earns interest. Interest is the money the bank pays you so that they can use your money to fund loans for other people.  Putting your money in a savings account also keeps your, money safe from getting robbed or catching on fire during a house fire.

 Basically it works like this: o You open a savings account at a bank o The bank pays you interest on the money that you deposit and leave in that account o The bank then loans that money out to other people, only they charge a slightly higher interest rate on the loan than what they pay you for your account

 1. Not Having a Budget  Over half of Americans report that they don’t have a budget at all, and about 20% say they don’t have a good idea of how much they spend on housing, food and entertainment.  2. Forgetting to Save—or Not Knowing How To  About 40% of adults say they’re saving less than they were last year, and nearly the same number say they don’t have any non-retirement savings whatsoever. This is the kicker: The survey respondents said that if they were to start amassing non- retirement savings, 25% of them would keep their savings at home, in cash.

 3. Overspending  Over a quarter of U.S. adults say they’re spending more than they did last year.  The most important thing is that your spending is intentional and responsible, rather than emotional or out-of-control.  4. Mishandling Your Credit Cards, Credit Score, Etc.  This year, U.S. adults are more likely to have applied and been rejected for a credit card than they were in Well over half of those surveyed haven’t reviewed their credit score or report in the last year, and about 40% carry a month-to-month balance on their credit cards. On the bright side, there are more people this year (44%) who viewed their credit score than last year (37%).

 “I Save What’s Left Over”  The risk with this: So you pay your bills, maybe make a few “fun” purchases too, then you transfer whatever is left over in your checking account to savings. The good news? You’re diligently trying to save.  Try this instead: Pay yourself first. “The first bill you should pay every month is your savings bill,” Blaylock says. Of course, only take the “pay yourself first” approach if you still have funds available to cover your regular monthly bills.  Strategy #2: “I Transfer Money Into a Savings Account Linked to My Checking”  The risk with this: You’re flexing your savings muscle on a regular basis, which is great! And having your savings account linked to your checking definitely is convenient, but you risk dipping into your savings to make ends meet—or even to fund an impulse purchase—because that money can be so easy to get to.

 Try this instead: While it’s advisable to keep a portion of your savings in an easily accessible account in the event of emergencies, it can be smart to keep the rest at a distance, in a separate “untouchable” account, says Blaylock.  Strategy #3: “All My Savings Go Into One Pot”  The risk with this: You’re socking money away at an impressive rate—and pooling it in one account, since it’s so much fun to see that balance grow, but, with this approach, it can be hard to know how much you’ve saved for different goals.  Try this instead: Give yourself a more visual overview of your savings progress by creating separate sub-accounts for different objectives, like your emergency savings, a down payment on a house, or a future vacation. Many online banks make this super easy, and you can even nickname your accounts so you know exactly what each one is earmarked for.

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Consider these three types of financial institutions when researching a savings account:  Banks : The biggest banks often seem appealing due to their abundance of branches, well-known brands, and variety of services, but they also tend to offer very low rates on saving accounts.  Credit Unions : Credit unions tend to offer higher rates than banks for share accounts. You may need to meet certain membership requirements to join  Online/Internet Banks: As a whole, high yield savings accounts at online banks maintain the best rates. The primary drawback is that, unlike traditional brick-and- mortar bank of the credit union, you can’t simply walk into a local branch for assistance.