Banking: Saving Basics
I know its been long overdue that I get away from the flashy stuff and start heading down the path of bank accounts, savings and the things we all don’t want to talk about. But unfortunately it’s happening and I’ve decided to start with some saving basics. One of the first steps to increase your net worth and prevent debt is to open up a savings account (don’t quote me on this, but it’s definitely a great first step). Most students, I hope, have a savings account but I’m going to assume most don’t, or don’t use it properly. Within this post I will cover just your standard savings account…don’t want to scare you off now.
Regular/Standard Savings Account
A savings account is something in addition to a preexisting chequing account that you already hold at your bank. It’s somewhere to put money that won’t be used on a day-to-day basis and allows you to earn a small amount of interest without having to invest yourself.
What you should look for in a savings account
- Choose a savings account with the highest interest rate possible without service charges (us students don’t have money to just give away)
- Some banks have been offering limited time “high” interest rates from about 1.5-2% on new deposits, check it out or inquire at your local branch
- Check out online banks like ING, Ally and PC Financial that have a focus on savings accounts with relatively higher interest rates than major banks
Yeah the word might sound scary, and even sound like your getting charged for something instead of earning it. In fact interest in a savings account is a good thing, not like those annoying charges on your credit card statement. Usually on a monthly basis interest is given as a percentage of the total value of your savings account, some banks might take the average monthly amount in your savings account instead.
Once you start seeing your interest deposits every month you will being to realize how low interest rates are these days. Huge interest values per month like $1, $2 and maybe one month it might even just reach $7. It’s definitely something to keep in perspective when it comes to how easily we pay for things that cost $10-$20 on a daily basis…see how long it takes to make that money back in interest! Might make you want to spend a little less on those McDonald’s burgers every week..
One of the issues that students may have is actually using their savings account as a chequing account. What I mean by this is a large portion of your savings account shouldn’t be touched on a frequent basis. It’s a place where monthly rent is pulled or that semester’s tuition comes from, but it shouldn’t be an account where daily withdrawals are made from in order to fund your night out downtown or your most recent clothing purchase.
It’s important to control your own bank account and be aware of the different products available at your bank AND what they can do for you. Having a savings account amazingly enough can help you save your money better, simply because it is also money that you don’t have easy instant access to
For more information check out this Government of Canada page on savings accounts. But seriously…my blog post is way more interest anyways.