Though saving isn’t fun or glamorous, it’s crucial to a healthy financial life. Money-saver extraordinaire Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.”

When you decide to make saving part of your budget, you feel in control of your finances rather than letting them control you. No longer is the question “Should you save?” but rather, “Which savings account should you choose?”

Which Savings Account Should You Choose?

Regular Savings Account

Considered one of the simplest ways to save money, a regular savings account can be opened easily at one of your local banks and requires you to put aside a little bit of money each month. The amount is generally set at the time the account is opened, but can be changed at any time. Because you are committing to put a certain amount in your savings account each month, the bank is able to offer you a higher interest rate than they are able to offer you in your checking account.

A regular savings account is best for people saving for a short term goal like a vacation, car, or wedding. It’s also the perfect account for those just wanting to get into the habit of saving. The money can be accessed at any time, and the account can be closed whenever the account holder wishes.

You need to remember that savings accounts have strict rules. For instance, missing a monthly payment to your savings account could incur severe penalties. Each bank has its own rules regarding their savings accounts, so talk to someone at your bank to learn the ins and outs of your account.

Money Market Account

If you’re looking for a slightly higher interest rate than regular savings accounts can offer, a money market account may be just what you need.

Here’s the rub: to get these higher interest rates, a higher minimum balance is required.

It’s also harder to withdraw from a money market account because you’re given a set number of checks and debit card swipes. A money market account isn’t a type of savings account that will make you a millionaire overnight, but it does have some great benefits.

Just as a regular savings account has penalties if a payment is missed, a money market account does as well. Again, in order to fully understand the variables of your account, it is best to speak with your bank about it.

Individual Retirement Account (IRA)

As the name suggests, this type of savings account is meant for long term savings, typically geared towards retirement. There are multiple types of IRAs, but the two most common are Traditional and Roth.

With traditional all of the deposits are tax deferred, but with a Roth account just the interest is tax deferred. Also, contributions to either of these IRAs may be tax deductible depending on your income level and other factors.

This type of account is much more complex than the two we discussed previously, but can be a major help in saving for retirement. If you’re interested in setting up an IRA, then it is best to talk to a financial planner so he or she can help you discover the best IRA for you.

Start Saving Today

Dave Ramsey once again hit the nail on the head when he said, “We buy things we don’t need with money we don’t have to impress people we don’t like.”
Instead of purchasing that brand new car you don’t need in order to impress your nosy neighbor down the street that you don’t even care for, why not stash some of that money away instead? A Regular Savings Account, Money Market Account, or IRA are all great options to help you on your path to financial stability.

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