Saving Mistakes to Avoid: Saving in Your Checking Account
Let's talk about another saving mistake that you might be making, and that's using your checking account as a savings account. And I know it might sound obvious that you shouldn't do this, but it's not uncommon at all for someone to only have one checking account that they use for absolutely everything.
I mean, it's their everyday spending account, their bill pay account, emergency savings account, Christmas gift account... This one single checking account is putting in way too much work. And if you want to get serious about building up your savings, you have to open up a dedicated savings account.
And, this does a few things for you.
First, it allows you to actually track your progress, because it is extremely hard to know how much money you have saved if the money is constantly coming in and out every time you get paid, or take a trip to the grocery store.
Second, you won't accidentally spend your emergency savings. Because when an unexpected expense pops up, you want to be sure that those dollars that you've specifically set aside for an emergency are there when you need it, and don't accidentally get spent during your, you know, latest vacation.
And, lastly, make your money work for you by earning a little bit of interest. Most checking accounts don't pay out any interest at all. And regardless of where interest rates are at any given time, a little free money in the form of interest is better than no free money at all.
So, make sure you put your savings to work in a separate savings account.