Savings accounts are a great tool to use to start saving money. They usually don't require large minimum deposit requirements, and they also pay interest. Like other common bank accounts, savings accounts are federally insured by the FDIC up to $250,000 per account, so your money is safe up to certain limits.
Unlike other interest-bearing accounts, such as CDs or money market accounts, savings accounts usually offer convenient and frequent access but interest-bearing accounts usually pay higher interest rates and are not designed to be highly transactional. This makes savings accounts very accessible to those who want to start working towards fulfilling a savings goal.
The amount of money you should have in savings ultimately depends on your savings goals. A savings goal can be for anything-short-term nest eggs, long-term financial goals, important life milestones, or fun activities.
A savings account is a great place to keep your emergency fund savings that can cover emergency expenses. It's generally recommended to keep at least 3-6 months of living expenses in an emergency fund so that if you lose your job, there's a delay in receiving payment, or if you get into some sort of accident, you can still support yourself without needing to borrow money.
Once you've established your emergency fund, you can start setting savings goals for other things, like your future goals, a passion project, or just something fun. Maybe you want to retire early, maybe you're saving for a down payment, or maybe you just want to cross a vacation destination off your bucket list. In any case, a savings account is a great place to store and build your funds.
Identifying your goals can be as simple as deciphering the costs of what you desire. For example, if you want to buy a new car, how much will it cost? If you want to take a vacation, how much do you need for travel and accommodations?
Whatever number you come up with, it's usually a good idea to make your savings goal slightly larger. That way if any surprise expenses come up, you can still afford them and get what you want.
A budget is a spending plan that factors in your savings. Calculate how much money you earn, how much money you spend, and the difference between those two will show you how much money is not being used. Then divide your savings goal by how much money is not being used, and you can see how long it will take you to reach your goal.
Are you happy with how long it will take? If so, you don't need to change anything. If not, your budget will show you what you can change.
You can adjust your budget however you like—the point of a budget is to help you become aware of your spending habits so that you can better align yourself with your goals and reach them when you want to.
Your budget can also show you ways to reach your goal faster. For example, if giving up coffee every week will help you reach your goal in 6 months instead of 10, you might decide it's worth it to give up coffee. Or you might not. Or you might decide to find ways to increase your income so you can have coffee every week and reach your goal in 6 months. It's all up to you.
Yes, it is possible to write checks from a savings account if your savings account offers that feature. Some savings accounts offer check writing, and some don't.
In most cases, people use checking accounts to write checks, use their debit cards, and have regular immediate access to cash, whereas savings accounts are designed to be used infrequently.
When you need access to the money in your savings account, you can visit a branch or transfer it to a linked checking account. If you have a checking and savings account through Citi, those accounts will be linked, and transfers will be processed quickly.
While there is usually not a limit to how much money you can have in a savings account, the FDIC only insures up to $250,000. If you are looking for alternatives to savings accounts, you may want to consider moving a portion of your money into other accounts that may offer higher interest rates such as CDs (certificate of deposit accounts), money market accounts, or accounts that are designed for specific savings goals like retirement or college savings.
Learn more about different types of Citi accounts.
Get started on your journey by opening a savings account.