Are you looking to refresh your financial journey in the New Year, but unsure of what financial tools to use to help you get there? Maybe you already have a few checking or savings accounts but are uncertain that you are getting the most out of them. No matter what your current financial situation is, there are basic financial accounts that everyone should have.
Checking Account
A checking account is the most common type of financial account. Checking accounts are where most people receive their paychecks via direct deposit. You may also use a checking account for daily transactions such as buying food and groceries, shopping for clothes, and paying for subscriptions. Checking accounts can be opened at virtually any financial institution, including banks, credit unions, and online banks. With convenient access to your account via debit cards, these types of accounts have mobile apps you can use to monitor your account balance and transactions. Some accounts offer extra rewards or perks if you meet certain criteria, such as minimum monthly deposits or transactions.
What You Need to Know: Use a checking account as your primary account for depositing your funds, such as paychecks or money received from friends and family electronically. Consider a High-Yield Checking Accountthat offers extra incentives based on your account activity.
Savings Account
A savings account is used to hold money you are saving for a specific purpose. Savings accounts usually have more restrictions and limitations than checking accounts, which can deter you from transferring money out of the account. Think of a savings account as a piggy bank where you stash money to use toward your goals. Once money goes into a piggy bank, it’s not easy to get out, and you wouldn’t necessarily “break” the piggy bank for just anything. With savings accounts, your goal should be to let the money sit and grow as much as possible. Some savings accounts offer interest, which means they pay you dividends each month or quarter based on the balance in your account.
What You Need to Know: Use a savings account to save for special goals, such as an emergency fund, a car or house down payment, travel funds, or gifts. Resist the urge to “dip into savings” so you can reach your goals quicker. Accounts that offer high interest rates, such as a High-Yield Savings, can boost your savings by paying you extra based on your account balance.
Retirement Account
A retirement account is a long-term savings plan that helps you plan for retirement. If you dream of one day leaving the workforce or even working less than you do now, you should take advantage of a retirement account. Retirement plans can feel complicated and sometimes daunting. One simple choice is to contribute to a retirement account sponsored by your employer, which is usually a 401(k). Some employers may even match the contributions you make. If your employer doesn’t offer a retirement plan, consider opening an Individual Retirement Account (IRA). There are different accounts with different benefits, so be sure to do the research and open the account best for you.
What You Need to Know: Use a retirement account to save and invest for your retirement – the earlier you start, the better. Take advantage of employee-sponsored accounts or open an IRA for yourself. Research the different accounts or speak with a knowledgeable finance professional.
Getting your finances in order does not have to be complicated. These fundamental accounts offer you the basic tools you need to succeed now and in the years to come. Get the most bang for your buck—it’s a great way to start the New Year! For more information on financial accounts or to get help opening one,
give us a visit at one of our many branch locations.