Pros and Cons of Savings Accounts: The Art of Saving Money

Everyone should have a savings account, even though there are a number of pros and cons with respect to setting up a saving account and maintaining it on a regular basis.

Consider the following pros and cons:

Early education in finances:

Every parent should teach a child the art of saving money as soon as possible, beginning with pennies, nickels and dimes saved in a piggy bank. When the piggy bank is full, if his or her parents take the time to open a saving account for their child and continue to deposit money in that saving account on a regular basis, the amount of money will continue to grow and accumulate interest. This is to everyone’s advantage.

Establishing a financial, learning curve:

Even a relatively young child can learn how to save money. It is important for him or her to establish a financial, learning curve early, as his or her future may depend upon how he or she handles his or her money over time. He or she has the joy of watching a bank account grow. His or her parents can explain why saving money is important and offer further guidance in terms of an ongoing financial learning curve for their child.

Establishing an education fund:

Many parents feel that setting up a savings account is a time consuming inconvenience for them, but looking ahead to the future with the child’s best interest at heart, the money that is saved can be designated as part of an education fund for college or university ensuring higher education for their child.

Meeting unexpected financial needs:

Parents that have established a saving account for their child, may find that their own financial needs are such that it is necessary to take the money out of the child’s savings account to meet their own unexpected needs or the unanticipated needs of the child. The savings account serves as a nest egg but depleting the savings account may defeat its original purpose.

Understanding bank charges and interest rates:

It does not take a lot of money to open a savings account, but when opening one it is important to look at ongoing bank charges and interest rates. What is the monthly maintenance on the saving account? Is the account a high interest savings account? Is the interest rate relatively low?

It may be worth the time it takes to talk to a financial adviser when setting up a savings account, whether it is for a child, teenager or adult. In other words, initially setting up a savings account may be feasible financially, but later, there may be other ways of re-investing that same money with respect to receiving higher financial returns.

Saving money in a saving account is always a good idea for anyone, regardless of age.

Because the options for investing and accumulating interest on savings are increasing, at the same time as the interest rates on saving accounts are dropping, being aware of one’s financial options at all times, becomes vital.

Saving money and earning interest on it is an art.