The Piggy Bank Alternative

When you were a child, where did you save your money? You probably saved the coins you found under the couch cushion in your cute piggy bank on top of your dresser. Was your piggy bank round? Skinny? Pink? Blue? Was it in the form of something other than a pig? Ok… enough about piggy banks. You’re an adult now. Hopefully the amount of money you save is more than just a few coins…substantially more than a few coins. When it comes to saving money, there is a much safer alternative to a piggy bank known as a depository institution.

A depository institution is a business that offers financial services, such as accounts to save money in. Banks and credit unions are two types of depository institutions. Most depository institutions offer some or all of the five accounts known as savings tools. These are the accounts that offer the most benefits for saving money:
 

There are many advantages to saving money in one of these depository institution accounts:

• Safety – As long as the depository institution carries insurance (which almost all do), money placed in any of these accounts will be insured from loss for up to $250,000 per account! That is a little more insurance than your piggy bank offers.

• Easily accessible – Unlike other financial options such as investment tools, these depository institution accounts make your money easily accessible while protecting it from loss at the same time. This is important for your emergency savings fund, because you want to be able to easily access your money if and when you may need to use it. Some of the savings tools accounts are much more accessible than others, so make sure to research each account and choose the one right for you.

• Interest – These accounts earn interest! Interest=more money… need I say more?

• Option for automatic transfers - Depository institution accounts may offer automatic transfer options so you can save money without having to do anything! Read “The Savings Habit” to learn more about automatic transfers.

When choosing an account to house your saved money, make sure to research both the depository institution and the specific account to choose what is best for you.