As a mom, you want maximum results and extended flexibility. And when it comes to the way you save money, or keep them, making the right choices can be the difference between stress and bliss. Financial products tend to have unnecessary limitations, like the maximum number of withdrawals or an unfair balance between the interest rate and the minimum deposit required, which can be intimidating.
In the order of minimal requirements, there are a checking account, the savings account, and the premium option of a money market account. Let’s see some pros and cons for each.
Opening a checking account is fast, easy and requires only to be of legal age to own a bank account. It’s the equivalent of keeping your money in a safe place, making you less tempted to spend them, yet retaining full liquidity. Nowadays most checking accounts have a debit card attached, making it easy to pay for current shopping without the risk of getting into credit card debt.
It replaces the outdated written checks and acts as a great way to pay bills and utilities. Also, saves you from the hassle of carrying cash around with you. The best part is that since this is an introductory banking product, it usually comes with no attached fees or commissions.
The downsideis that you can’t dispute or reverse charges, making such an account very vulnerable to fraud and theft. It’s better to restrain from using such cards for online payments.
Compared to checking accounts, savings accounts are federally insured, therefore are much safer. Also, these provide you with a much better interest rate, but there is a catch. You have to keep your money in the account for a determined period to get the full interest. This could be inconvenient, especially if you run into some trouble and you need to access them quickly.
The great thing about saving accounts is that you can set up an automated payment and grow your money tax-free until you withdraw them. The out of sight out of mind approachcan help you save thousands without even thinking about it.
The current economic condition makes savings accounts less tempting. You won’t enjoy a high-interest rate; you could even have the unpleasant surprise of a higher inflation rate compared to the interest.
Money Market Account
If you have used a saving account for some time now, accumulating enough wealth and would love to see it grow faster, a money market account could be a good choice for you. Decide after you read the best advice on money market accounts.
A little less flexible than a checking account, but still allowing you to write a few checks and withdraw money, it comes with the promise of a better interest rate compared to the other options. The interest rate might vary over time, and the minimum deposit starts around $250, although some companies require up to $1,000. It’s not enough to have this money as an initial deposit; you need to keep them to avoid fees. Compared to savings accounts, there is higher liquidity.
Drawing the line
Your current situation and earnings level dictate the best tools for your savings. If you ask us, we would recommend a mix between these options, since there is no one-size fits all solution. You could keep 70% of your earning in a checking account for easy accessing and the remaining part either in a savings account if you don’t have enough money yet. Once you have the minimum amount, transfer them to a money market option to get the benefits of higher interest rate and more flexibility.