Is a savings account necessary?

[Gailete]

I just wish they didn't have to put up with bank shenanigans to implement these sort of strategies.

Not all banks, nor all of us have any shenanigans to put up with, so I personally have no trouble having several checking and several savings accounts. If I combined all my money in one account, it would look like we had far more money than we think we do since much of it is spoken for already.

Money never burns a whole in my pocket, but seeing that I have $25,000 in a checking account would make me think emotionally that I have enough to buy whatever. When it is separated out and I have $100 in my checking account, I know for sure I don't have the money. This was actually a system I read about in a book on money when you are drowning in debt. and it helped me see the light. http://www.amazon.com/What-Want-Life...money+you+have

[feh]

Not all banks, nor all of us have any shenanigans to put up with, so I personally have no trouble having several checking and several savings accounts. If I combined all my money in one account, it would look like we had far more money than we think we do since much of it is spoken for already.

Money never burns a whole in my pocket, but seeing that I have $25,000 in a checking account would make me think emotionally that I have enough to buy whatever. When it is separated out and I have $100 in my checking account, I know for sure I don't have the money. This was actually a system I read about in a book on money when you are drowning in debt. and it helped me see the light. http://www.amazon.com/What-Want-Life...money+you+have

I find it interesting how psychology plays into spending/saving habits. We have one primary savings account, and it always has roughly $20K in it. Seeing that total does not lead me to spend unnecessarily.

[Gailete]

We have one primary savings account, and it always has roughly $20K in it. Seeing that total does not lead me to spend unnecessarily.

It would be thrilling for us to have that much in our checking account! It is almost a year's income for us. Which is why I can only keep what is needed to pay bills in a checking account. This is why writing one extra/unintended check for $100 could be so damaging financially for us. I have to be extremely strict with our money so that all bills are paid and paid on time. We have very little leeway for financial 'accidents'.

I find it equally interesting why anyone would keep that much in a checking account unless it is only 1-2 months income and expenses for them. I would invest most of that in some form of savings or investment vehicle where it could earn money while it is waiting around to be used.

[feh]

I find it equally interesting why anyone would keep that much in a checking account unless it is only 1-2 months income and expenses for them. I would invest most of that in some form of savings or investment vehicle where it could earn money while it is waiting around to be used.

It's not checking; it's a savings account which holds our EF and funds used for occasional large purchases. It's earning .85% at the moment.

[Gailete]

Oops, sorry, misread that since the others had been talking of why they didn't seem to need a savings account only their checking. I would have no problem with keeping that much in a savings account. Actually would be happy to have that much in any of our savings accounts and one day hope to do so!

[TheKayla]

I think the biggest thing to would be: do you think you'll spend money if you just keep it in your normal banking account where it is so easily available? Interest rates are low right now, but if you set up an automatic transfer each month to go into saving, it may have a greater impact just on your saving habits than anything else. Plus, if interest rates go up again, you'll have some money socked away and just sitting there. I have a SmartPig account that I use only at 1%, and even though I make pennies, it's exciting to see that little bit Plus it helps me saved in an organized way, which I believe is the biggest benefit. But you're right, there's not a huge mathematical difference, especially now -- it really is just a preference and what you know will work best for you.

[4theluvofgold]

I use a Money Market Fund. It requires a minimum balance to earn interest but, it does earn better interest. 2.25% for 2000. If it goes below the interest isn't earned but it doesn't cost any fees at all if it goes below. See if Money Market Accounts are an option.