Opening a savings account isn’t complicated, but it can be an important stepping stone on your journey to financial wellness. With a savings account, you can start building a nest egg for your future.
Read on to learn how to start a savings account and some of the benefits of doing so.
Should I start a savings account?
Opening a savings account can help you tackle life’s hiccups and give you a starting point for planning your financial future. Here are a few reasons why you should consider opening a savings account.
Emergency fund
An emergency fund is likely a top priority when it comes to saving. Emergency funds act as a safety net for unforeseen bills or unexpected events. In case you lose your job or your car needs repairs, an emergency fund enables you to meet these expenses and still buy food and other essentials that month.
Major purchases
Time and time again we’re faced with major expenses that aren’t exactly emergencies, but that need to be paid for nonetheless. This can include a new computer, a new car, holiday gifts, college funds, or more. Having money saved up can help cushion the blow of expensive purchases.
Vacation
Instead of charging vacations to a credit card and racking up debt, saving money ahead of time will allow you to truly enjoy your vacation with peace of mind.
Medical expenses
No one likes to think about getting sick, but it’s best to be prepared either way. If you can use a savings account to cover unexpected medical costs like co-pays, prescriptions, and other bills, you might b e able to reduce your worries.
How much money do you need to open a savings account?
It really depends on where you open your savings account. Some banks may require an initial minimum deposit to open a savings account. Many people think they need a lot of savings right off the bat to open an account but you’ll find some that might let you open an account with as little as $5. The key is to keep adding. If you have a regular job and direct deposit of your paycheck, consider asking your employer to send an amount to your savings account every time you get paid. Chances are you won’t notice it’s gone from your income stream and you will be happy that you stashed that money in the bank.
What type of savings account should I open?
Look for an account with a high interest rate compared to other offers and with as few restrictions as possible on how often you can withdraw money, as well as similar provisions.
Can I open a savings account online?
Yes! You can absolutely open a savings account online. In fact, it may even be easier than going into a bank branch or calling a branch.
7 Easy steps to open a savings account
Looking to open a savings account? Here’s how to start saving money in 7 simple steps.
1. Choose how to apply
Decide whether you’d prefer to open a savings account online, by phone, in person, or by mailing an application. Different banks have different options, but online is usually the fastest process.
2. Provide proof of your identification
In order to open a savings account, you’ll need to provide a number of personal documents to verify your identity. Bank applications will usually require you to provide your Social Security number or tax ID number, information from a government issued ID, and more.
3. Provide your contact info
Along with your identity documents, you’ll also have to provide your personal contact information, such as your full name, home address, date of birth, and more.
4. Select a single or joint account
Choose if you want to open a single or a joint account with someone else. If you’re married, you may choose to open an account with your spouse. You can also open an account with another family member, for example, or a partner you live with. For joint savings accounts, the other person will need their ID and contact information as well.
5. Accept the terms and conditions
Banks have a number of terms and conditions you’ll need to go through in order to understand what you’re signing up for. Always look within the details for fees and when you might have to pay them.
6. Choose your deposit amount
If you’re opening a savings account online or by phone, you should be able to transfer funds with a routing and account number from an existing bank account. If you’re opening your account in person, you can use cash or a check. Not all savings accounts require an initial opening deposit, but make sure to read the terms before signing up just in case.
7. Submit your application
If you apply online your account may be fully set up within minutes. However, some banks can take a few days to verify your information.
Once you get it set up, you may find that a savings account is a great way to save money.
FAQs
Why open a savings account?
Opening a savings account helps you to start saving for the future and important financial goals.
Is it free to open a savings account?
It depends on the specific bank you’re working with. Many banks won’t charge you for opening a savings account, however, you may be required to make an initial deposit to open the account.
Written by Jacinta Sherris Jacinta Sherris is a full-time writer with a B.A in Economics from New York University. Since 2017, she has contributed numerous lifestyle and finance articles to a wide range of companies and publications, including MoneyLion. In her free time, she enjoys pursuing her artistic passions and traveling.
