Savings accounts are deposit accounts intended to hold funds not meant for immediate use. In contrast, checking accounts are:
- Transactional accounts are designed for regular, day-to-day spending through methods like writing checks.
- Making purchases with a debit card.
- Withdrawing cash from ATMs.
While savings accounts help accumulate money for future needs, checking accounts facilitate more routine financial transactions for expenses incurred in the short term. It is essential to maintain your savings account because one can earn interest on their money without doing anything extra.
Here are the simple ways to increase your savings account:
- Set your Priorities – Maintaining savings is a critical life practice that prepares one to handle unexpected situations. However, people do not solely save money for rainy day contingencies; instead, savings often aim to fulfill aspirations. The motivation behind individual savings habits depends on personal goals and priorities that vary according to one’s stage of life. While preparing for emergencies through savings is prudent, fulfilling dreams and desires drives many to set funds aside for future use. Ultimately, the specific reasons one chooses to save money can differ significantly from person to person based on their circumstances and objectives at a given point in time.
- Make Your Savings Work, Not Sit Idle – While many save diligently; most overlook that their hard-earned funds should be appreciated as incomes increase relative to economic and inflationary forces. Savings left idle in bank accounts lose purchasing power as currency devalues. What $100 could have been purchased ten years ago may not have gone as far today. Therefore, for savings to maintain real value, growth must move forward on this rate of erosion in purchasing power to which money passively held is naturally susceptible.
- Explore Options to Grow Your Hard-Earned Savings—Strategic investing options allow your savings to increase at a pace comparable to broader economic and price-level changes.
- Using Mutual Funds—Mutual funds can be a suitable option to reduce the risk of currency devaluation and earn returns that track broader economic growth. While direct investment in capital markets carries more value, mutual funds help diversify this risk across multiple securities. Evidence shows that mutual funds have historically achieved appreciation that largely keeps pace with benchmark indices over time.
It’s important to save money and make it grow. Saving alone won’t cut it – you need to use your savings instead of just letting it sit there. Figure out your goals, then choose ways to invest your savings so they increase over time. Putting money in mutual funds is a good option. Mutual funds let your money be part of a big pool that grows as the economy grows. It also helps protect your savings if money loses value. Take charge of your savings by investing it well. Then, your hard-earned cash will keep up with inflation and maybe even gain value. Having a plan for your savings and taking action will help you feel more secure with your money and reach what you’re saving for.
