One of the first steps of adulthood is getting a bank account, which is typically done to keep one’s finances in place. Along with that, it also helps in providing an effective method of managing money.
However, the truth is that there is no one type of bank account that caters to all needs. According to Bill Schantz, different bank accounts help to fulfill different obligations. Each comes with a certain set of characteristics, which helps decide what kind of an account one needs. By simple comparison of related pros and cons, individuals can choose accounts that benefit them the most.
As Bill Schantz says, you do not even have to be an adult to get a savings account!
That’s right. This type of account is set by individuals who want to keep money aside for the future, with the added interest helping their money grow.
Savings accounts also act as an individual’s first interaction with the world of finance. It gives them monetary knowledge along with the added experience of managing an account dedicated to saving money.
The downfall is that such an account does not come with a debit card. So, ATM withdrawals are not possible. Instead, you can make limited withdrawals directly from the bank.
Bill Schantz’s Favourite: Checking Account
This is the account that one uses for everyday use. This includes paying bills, cashing or depositing checks, and making ATM withdrawals. Recently, banks have started providing all such services online as well.
Usually, checking accounts do not come with set interest. So, they do not help build up cash, as Bill Schantz attests. The primary purpose of this account is a short-term way to manage cash flow effectively.
Money Market Account
This type acts as a hybrid between a savings and a checking account. Such an account charges interest. Along with that, it also allows certain bank withdrawals.
Hence, it can prove to be useful for saving money or maintaining cash flow. Even both. Especially for people who want to earn more interest. The only downfall is a limited number of withdrawals; a number set for monthly use.
As the name suggests, a retirement account helps to save for retirement. One of the main benefits of such an account is the limited tax that is paid according to the account type and does not include income tax.
Retirement accounts also allow one to make different kinds of investments. Bill Schantz especially suggests such an account if one wants to invest in stocks later on.
Bill Schantz’s Advice About Bank Accounts
People often get confused about what kind of a bank account they should opt for. The answer is simple – whichever one suits you the most.
If someone is looking to save up for college, a savings account works best. If someone wants to work on their retirement savings, then a retirement plan. For someone who spends a big chunk of their money on bills, a savings account.
And in case you are someone who needs to fulfill two such obligations, you can always opt for more. It is completely normal for people to have more than one type of bank account.
In the end, it comes to being able to manage money effectively. Be it creating savings, paying bills, or planning retirement. A proper place is always needed to keep the money safe and to be able to use it properly.
Hence, choosing a bank account that suits one’s needs is crucial. In the end, it is not only about keeping money; it is also about taking care of your financial needs.