If you are working to create financial success and stability, building a healthy savings account is Level 1. If you don’t currently have a savings account, you are not alone. In fact, 45% of Americans have $0 in savings.

But you know what?? That means 55% of Americans DO have a savings account! I want you to be in this category!

If you only have a checking account (or perhaps no bank accounts at all), here is why I think you need a separate savings account too:

1. Out of Sight, Out of Mind

I have a sweet tooth problem. If you put a plate of chocolate chip cookies in front of me, I could inhale 6 before you poured the glass of milk. To ward off diabetes, I avoid having too many sweets in my house.

If I do have sweets, I might try to place them somewhere not directly in my line of vision. Out of sight is out of mind. I am much less likely to indulge when the temptation isn’t easily accessible.

This principle can work with your money too. It’s easy to see a fresh paycheck deposited into your checking account. It’s even easier to spend it a wee bit too fast.

If you open a savings account, you can have $100 automatically sent there each month. Don’t put the savings account app on your phone. Don’t log in to the account often. Treat it like it isn’t even there. Within a year, you could have more savings than 70% of Americans!

2. Fraud Protection

Fraudulent activity is much more likely to occur in checking accounts. You might experience a fake check or perhaps a stolen debit card number.

Banks often protect you and don’t penalize you for fraudulent activity. However, the resolution is not always quick. If you have a large amount of money stolen from your checking account, you might not have that refunded for a couple of weeks!

Consider keeping just enough money in your checking account to pay your monthly bills. This leaves less for fraudsters to access if they get their hands on your debit card. The rest of your money may be a little safer in a savings account. Be careful to have enough of a buffer to avoid overdraft fees!

3. Better Earnings

The average interest on a checking account is 0.04%. At that point… they might as well just call it 0%. Honestly though, savings accounts at brick and mortar banks aren’t always that much better (0.06%).

Online savings accounts generally have much higher interest. If you simply search “best online savings account,” you may find information from Citi, Ally, Capital One 360, Marcus, Discover, Synchrony, Citizens Access, etc.

For the most part, these accounts have reasonable interest rates and low fees. I cannot say I would recommend one bank over the other. Always always always do your own research to ensure the online savings bank is dependable, reputable, suitable for you, and doesn’t have hidden fees.

If you work with a financial advisor, you also might be able to open a low-fee account with money market funds. These funds carry little risk, are essentially as liquid as cash, and earn more than many savings accounts.

4. Goal-Based Planning

Some people are very goal-based planners. That can be a great thing! These people might prefer having a separate savings account or “bucket” for each goal: one account for college, one for the vacation fund, and one for the new car fund. It allows for progress towards each goal to be tracked easily.

This is great for bucket thinkers, but too many accounts can be overwhelming for others. There is certainly something to be said about the simplicity of just having one checking and one savings account. Do what works for you!

Remember though, the FDIC only insures up to $250,000 per depositor per bank. If you have a lot of cash, you should consider opening accounts at multiple institutions.


I want you to be able to handle the everyday financial emergencies that life inevitably throws your way. Having a well-funded savings account is a key to making this happen!

If you want to make sure you are on track for success in other areas of your financial life, please download my Financial Planning Checklist. I hope it helps you get organized and pushes you to grow!