A savings account is such a safe place where we can store cash at any time and any amount. At the same time, we earn interest on our deposited money.
Most banks and financial institutions and credit unions offer savings account which allows any time deposit and withdrawals along with earning interest all through.
Definition of it.
In the first place, a savings account is mainly an interest-paying basic deposit account. The bank or post-office or other financial institutes provides and delivers a modest interest rate against the deposited amount.
Bank or post-office or other financial institutes offer the limited number of withdrawals from a savings account per month and have to minimum monthly or quarterly balance though it varies in various institutes.
Moreover, the institutions provide check-book and debit card with the opening of savings accounts if we demand them.
We all know the importance of savings in our life and savings account opening is a very important step towards it.
Actually, the proper use of it will definitely find true happiness in our life indirectly.
How to Open a Savings Bank Account?
- Indeed, it is very easy and simple and generally takes one hour or so.
- In all honesty, it will serve us for our whole life if we do not close it.
- Actually, we can open it online or go to the nearest branch from our location.
- In either case, we need our photo identity card and residential proof and pan card and photos and minimum deposit amount, if any.
- Normally, the account holder must be an adult.
- We may open it jointly, with anyone of my family member. In such a case, at least one must be adult.
But, first of all, we will compare banks by reviewing their rate of interest or maintaining a minimum balance or various fees. And above all, their speed of service.
It is WORKINGS:
Normally we open savings accounts to keep the money which is not for daily or regular expenses.
Moreover, it facilitates various types of deposit and payment in self or other institutes.
Besides, it has monthly limits on the number of withdrawals or no. of transactions we may make freely in any month.
ADVANTAGES OF SAVINGS ACCOUNT:
Most importantly, the advantages of savings account: –
1)Unforeseen spending –
We do not know when an emergency crisis will take place and we will have to arrange a lump sum amount of money.
In all honesty, we need at least a few months’ salaries in our savings account if we lose our job all on a sudden.
Moreover, medical expenditures may occur at any point in time, or our house may be damaged in natural calamities.
Furthermore, our electrical and electronic gadgets like light, fan, electrical wearing, television, fridge, washing machine, computer/laptop, phones etc. may stop functioning at any point in time. A sudden requirement of money is very essential at that time.
If we have our own two or four-wheeler, it may be damaged due to accident or any other reason and needs repairmen and we need money.
2)Asset protection –
Traditionally the return of savings accounts is much less than those of other types of investments. For example, real estate, bonds, stocks etc. return much more than a savings account. We may put all our capital in speculative investments like land, shares, mutual funds etc. for a higher return. But we may have to sell at an unfortunate time due to a sudden expense or emergency.
If we have a savings account, we may sell it partly or we may keep some money in the savings account to tackle the situations and guard our investment against loss due to forced selling.
3)Self-determination from the credit –
A savings account always helps us to reach our financial targets without using credit card and loan. If we use the credit card, we generally tend to buy with the assumption to pay in time, although the money is not now with us. One day we will be in debt-trap and it will be very hard to come out of the trap.
Marketing without sufficient money in the savings account is a very fatal trend to ruin a person.
Use the debit card instead of the credit card. The difference is we can use a debit card only when we have sufficient money in our bank account. It controls our unnecessary expenditures to a great extent. Life is full of uncertainties. If unexpected happens, like accidents, illness etc we require money to pay for the unplanned bills. A properly managed savings account helps us to have the money easily available at these points of emergencies
Government employees and employees of reputed companies get their salary through a savings account.
5)Need Not to Carry Cash-
We can pay anyone or anywhere using debit card and phone pay app provided we have sufficient money in our savings account.
Normally, a savings account holds our money safely and government in most cases take the guarantee for the safety of our money.
If we keep money with us we will get no interest over them and so, miss the chance of growing it. In addition, we may lose it at any time by any mean, say pickpocket or fall down anywhere.
On the other hand, if we want to spend money, we can easily withdraw or transfer or pay cash using various gateways.
Because, savings account pay interest every month, so our money grows there to some extent. It may be very minimum, but in our whole life, it is very much substantial.
8) Earn Using Cards-
If we pay through our cards, we may earn points which is redeemable. Otherwise, we may get discounts. Moreover, we may use various digital payment gateways like google pay or pay TM or amazon pay or yono etc. and earn.
Even it can help to save money from being a housewife.
Let Our Money Grow for Us –
At present, our savings amount may get fixed deposit rate which is higher than the savings rate. Our unused savings amount will be treated as a fixed deposit and will get the prevailing FD rate of interest. At any point in time, we can encash the amount if required.
Due to these advantages, our savings grow for a better future.
How Much Money Did We need in Our Savings Account?
Most importantly, this is very hard to decide.
Normally, we should keep the total amount of our three to six months’ expenditure. This will help us at any point of time if we need instant money.
In all honesty, it helps us to lessen our stress- the silent killer.
We also learn stress management techniques.
SAVINGS ACCOUNT DISADVANTAGES:
Because it is highly liquid, therefore easy liquidity of funds can tempt us to spend them. This is the only disadvantage.
To tell the truth, we normally keep money safely for near-future (say yearly or so) needs. We use it for major purchases and expenses for upcoming vacations or occasions and emergency purposes.
We can pay a premium of life insurance policies to avail the benefits.
Moreover, health insurance, general insurance, monthly electricity bill, mobile recharge, cable or DTH recharge etc.
However, freelancers get their payments through their savings account. Even Indian central and state governments, as well as many private sectors companies, pay their employees through this account.
Multiple Savings Account:
Some of us normally prefer more than one or multiple accounts for different purposes. It basically helps to set our short-term financial goals and save for those. Additionally, we can easily find out the exact expenditure for the purpose.
If we maintain an account to celebrate birthdays of spouse and sons, it helps to strengthen love and relation.
How to Add Funds to Our Savings Account:
However, depositing or adding funds in our savings account is very easy and convincing. We can either deposit cash or cheques directly in our account. We can also make bank to bank or account to account(electronic) transfer. Besides, we also can add funds through internet.
Moreover, there are many money-making apps. With the help of these apps, we can transfer money to others account. Additionally, we can make payments where payments through this app are applicable.
This is another way by which we can do various banking activities and for that, we need not go to the bank personally.
In fact, we need motivation-a powerful emotion to do any work.
- Firstly, we have to do a minimum number of deposit and withdrawals per year. In India normally it is two deposits and two withdrawals in a year.
- Secondly, the duration of the operation is six months i.e. we have to deposit and withdraw at least once in six months.
- Thirdly, Minimum Balance is required.
- Moreover, we must use a mobile message facility, although they charge a minimum amount for providing these services.
- Most importantly, do not share your account or card details publicly or to anybody.
- We require a savings account to fulfil all our financial goals.
Best banks of India:
There are Nationalized as well as Private banks
- State Bank of India
- Bank of Baroda
- United Bank of India
- Punjab National Bank
- Bank of India
- IDBI Bank
- Canara Bank
- Axis Bank
- HDFC Bank
- Kotak Mahindra
- Digi Bank
- ICICI Bank
- Yes Bank
- Bandhan Bank
We must open a savings account and use it properly so that we can build sufficient savings by channelizing money in various savings and help to grow our savings.
To know more about various savings read GROW OUR SAVINGS