You probably don’t put much thought into how you’re using your bank accounts, which means you’re likely not making the most of them. When used wisely, your savings and checking accounts can help you reach your financial goals in the short and long term.
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Use a Debit Account To Keep Spending in Check
If you typically use credit cards to make purchases, you could be overspending. Anuj Nayar, financial health officer at LendingClub, recommends using debit cards instead of credit cards to keep spending in check. He especially recommends utilizing a debit account that offers cash back or other rewards.
“By using a debit card, you can better keep track of your finances while also earning the rewards that you’d see with a credit card,” he said.
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Open a High-Yield Savings Account for Long-Term Goals
The average savings account interest rate is just 0.07% as of May 2022, but you could be earning more if you moved your funds to a high-yield savings account.
“This type of account is great for saving for the future or as an emergency fund,” Nayar said.
Open a Money Market Account for Mid-Term Goals
A money market account is a type of savings account that offers some checking or debit card features. Traditionally, money market accounts pay higher interest rates than regular savings accounts.
“If you’re going to save up for buying a new car or going on a vacation, then a money market account is right for you,” said Levon L. Galstyan, a certified public accountant at Oak View Law Group. “It is best for your mid-term goals.”
Link Your Bank Accounts to a Budgeting App
Creating a budget allows you to manage your spending, save money and get out of debt.
“One of the most convenient ways to keep track of your money is by linking a budgeting app to your bank account,” Galstyan said. “They keep track of every transaction that is happening on your account.”
Automatically Save for Property Taxes
Maria Porto, VP of financial wellness at Hanscom Federal Credit Union, recommends opening a separate savings account specifically for property taxes and having money automatically deposited into this account each pay period.
“When you have a mortgage, your property taxes are rolled into that, but when your mortgage is paid off, property taxes are something you have to account for,” she said. “Put money aside each pay period in a savings account so that you don’t have to worry about getting slammed with a huge tax bill.”
Automatically Save for Other Goals
If you don’t have to pay property taxes, you may want to set up automatic contributions to accounts set up for other goals, such as a vacation fund or emergency savings.
“If your credit union or bank offers an automated savings account, sign up for it,” Porto said. “At Hanscom FCU, we have an account where you can automatically save $5 to $500 a month.”
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