Saving money could help you achieve financial security. It allows you to have money in case of emergencies or can help you work your way up to purchase big ticket items. And the best part is it's never too early or too late to get started. So where do you begin? No matter your reason for wanting to save money, opening a savings account is a great way to start. From its benefits to tips on how you can make the most of one, let's break down the basics of a savings account.
A savings account is just what it sounds like. It’s a deposit account that is designed for saving cash. For larger purchases like a car, a wedding, a dream vacation or even just a rainy day, a savings account can help you get there. Unlike a chequing account that most people use to perform day-to-day transactions, a savings account should be used as a tool to help you put money aside.
Besides being a great tool to help you put money aside for what you really want, here are some other benefits that may be available to you, if you have a savings account:
- You could earn interest on your savings
The amount of interest you earn will depend on whether your savings account offers you a savings interest rate as well as the amount of the funds you have in your account.
- You can automate your savings
To help reach your goals even faster, you could set up an automatic transfer from your chequing account to your savings account if the service is available.
- Your funds are easily accessible
You can access your money at any time. Depending on the type of savings account you have, you may be limited to how many transactions you can make per month and have to pay a fee for any transactions in excess of the limit.
- Get started online and no monthly fees
Some savings accounts can be opened online, and may offer no monthly fees. Plus, you may not need a minimum balance to get started.
Below are some tips to help you manage a savings account to best serve your needs and goals.
1. Have a savings goal in mind.
Choosing a specific goal to work towards can help you stay consistent and motivated to keep setting aside money.
2. Choose a savings account that best suits your needs and goals.
Some savings accounts offer high interest rates while others may focus on flexible features such as no limit on the number of transactions you can make without paying a fee.
3. Only put money into your savings account that you can afford to set aside.
A savings account is best used when you need to make occasional withdrawals. Some savings accounts have a limit on the number of free transactions you can make per month, so be mindful of how frequently you withdraw money to ensure you don't get charged.
4. If available, take advantage of any additional tools that could help you save more easily.
For example, at TD, you can benefit from automated savings where you can set up a transfer of funds to your savings account on a schedule of your choice. You can also utilize the TD MySpend app which can help you set saving goals and monitor your spending, which could help you reach your savings goals faster.
5. Turn your savings into an investment.
If you are putting your cash aside for the longer term, you may want to consider investing. See this TD article for information about the difference between saving and investing
Ready to make some headway on your savings goals? Speak with a TD advisor today to get started with a savings account that best suits your needs.