It's September, which means we are all back in school, rather virtual or in-person. Last month we talked about the importance of budgeting to help you avoid becoming #BrokeCollegeStudents, this month, we are talking about savings and checking accounts and their significance.
Checking Account
What is it?
Where all your spending and everyday money is held, this is the account your debit card, if you have one, is attached to. Checking accounts usually have little or no interest attached to them.
Importance
It keeps a digital trail of your money, unlike cash, as it is usually tied to a debit card.
Allows quick access for purchases, bill payments, and paychecks.
Savings Account
What is it?
Where the money you are saving is held is usually an account with interest; the amount of interest depends on the type of savings account you have.
Importance
Savings accounts act like safety nets. If an emergency or unexpected situation comes about and need money you would have some.
* You can even have a savings account with a different bank, from your checking account, if you need your savings out of sight and out of mind so that you don't spend it.
Why can't I have just one?
It is easy to spend all your money when you have just a checking account and you have no "safety net." Everything is just going in and out of one account.
When you have just a savings account, you may be charged for withdraws, depending on the type of account you have. Every time you withdraw, you impact your potential interest.
Now you know the difference and the importance of both a savings and checking account. I hope that you have at least one of each.
Table comparison of the two accounts and their benefits: click here
Why Savings Account? Click here
Why Checking Account? Click here
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