HEY!! Is this a GOOD idea?

Question

I have a checking account, BUT I want to start saving a little extra money for a few things...like starting a baby fund....having a vacation fund, and just having an extra emergency stash!

Anyways, I think I should just open up another checking account, so that I have access to my extra money when I want it....I though about opening up a savings account, but they have to many restrictions, and its more complicated to use your money??

Is this a good idea?

Answer 1

Sorry to be so blunt, but I think it's a terrible idea for two reasons. First, you are giving up the interest that a savings account would give you. More important, it sounds like you plan to constantly raid your savings, which would defeat the whole purpose. I think you should make it as difficult as possible to get at the money until you are more disciplined about saving.

Answer 2

All fantastic responses here. Nice job to everyone. I apologize if I'm wrong, but you sound young and without debt. It sounds like you are in a nice position to make good decisions. I'm not sure how much money you make but may I suggest a few things for you.

1. Set some goals for yourself. How much money do you need and when will you need it?
You may not know that there are different accounts for different needs.

You mentioned a baby fund... if you already have a baby, you should begin saving for college. There are IRA's and tax-free funds for your kids.

You should take advantage of your employer's 401k if they offer one. Most will match what you put in which means that you are basically getting tax=free 100% return on your money.

I won't mention much about mutual funds and savings acct but these are nice to have for liquidity.

In a perfect world, here's how you should be saving.

10% of every paycheck should be saved. You need at least 6 of the 10% to go towards tax deferred funds like an IRA or 401k. The other 4% should be place in a savings account. Once a year you should take half of your savings and invest it into a mutual fund that is less liquid, but gives you the opportunity to grow more.

Basic Savings accounts should hold about 3-6 months worht of expenses. this way if you are injured or lose your job, you can keep floating until you are back on your feet.

Answer 3

Basic saving accounts are not that restricted. If you get one you can get the debit card that you use for your checking account so you can easily access your funds. Some saving accounts are set up so the more money you deposit, you earn interest which can help you grow your funds alot faster. Don't cancel out the savings because that is what it is for..... saving for those vacations or emergencys.

Answer 4

I recommend getting a high-yield savings account online that will give you over 5% in interest. If you want to save money- you need to make at least ~3% or you will be LOSING money to inflation.

You can link up your checking account to the online account (check out etrade or ING Direct for good rates) and you can make transfers back and forth pretty easy. With money-making accounts, you'll only be able to withdraw 6 times a month, but if you want to actually save the money, you won't need more than that.

check out the book here http://www.amazon.com/gp/redirect.html?ie=UTF8&location=http%3A%2F%2Fwww.amazon.com%2Fexec%2Fobidos%2FASIN%2F1600200400&tag=thestateofart-20&linkCode=ur2&camp=1789&creative=9325 it's a great resource for money issues, especially credit cards and banks.

Answer 5

If you are looking to save the money, I would recommend that you put it into an account that makes it just a bit harder to get to the money.

Try ING direct. On-line only bank, pays GREAT rates, and you cannot get to your savings instantly, so you have a little waiting period before you can splurge.

Answer 6

I think that your thinking is wrong. You are too much in spending mode and not enough in saving mode. Save money, don't look to set money aside for such specific events. Do those things when you can afford them from your regular income but save money on a regular basis, from each paycheck so you can have money to retire.

Answer 7

Look into Money Market Accounts.

They pay a higher interest rate and you can also use it like a checking account.

Answer 8

Go talk to a personal banker and tell them your needs and that you want more flexibility with your money then a savings account allows