Friday, December 30, 2011

Financial Fitness 101

Rule #2
Open A Bank Account

Despite common misconceptions, banking doesn't have to be boring!

There are at least three different accounts an individual should open: checking, savings and retirement. A checking account is basically for your earnings to be deposited into and for you to take  pay bills, tithe and make purchases. Additionally, many businesses provide a direct deposit option for their employees. This means that once you have a job, your paychecks can go straight into your account (no trip to the bank = no extra money spent on gas!).

A savings account is for depositing money that you would like to save. It is always good to have money saved because it can help relieve bills, unexpected payments, cover future expenses and provide during an emergency. I personally enjoy saving because it allows me to dream. Money certainly isn't everything, but in some cases it provides more freedom to make certain decisions AND the more you have, the more you can give away!

A retirement account is somewhat different than a savings account because there is a specific goal in saving the money, and that is that it will be used upon retirement. In order to access the funds of a retirement account, you typically have to be a certain age. With a savings account, your money is typically always available for access. A great benefit of both savings and retirement accounts is the opportunity to earn interest. This means that the bank will add money to your account based on a certain percentage they are willing to pay. The interest amount may not be much, but it is still money that you receive for free! When contributing to these accounts, the key is to contribute. You may feel discouraged if you only have a few dollars to contribute to each account, but saving a few dollars at a time when you can is much better than not saving at all. You always have the option of starting out small and increasing contributions later. Remember, even if you are a minor, you are able to open bank accounts, the only caveat is that you will need an adult to sign on with you (trust me I know, because when I went back to the bank at 21 to open an "adult" account, the teller stooped down to my height and asked in a really loud, cheerful voice if I wanted to open a teen account. So yeah, those are still being offered. . . ).

Happy banking!