Budgeting Spread : I started my first step of saving money by opening a bank saving account with a local bank. I believe most you also shared the same experience as mine. I remembered the bank saving account was opened during my primary schooling days with my ang pow money. From then onwards, I would save up some of my schooling pocket money and deposit them into the saving account. At that time, I do not know much about bank saving account, saving account interest nor saving account rate. My parent did all the saving decisions and deposited the money for me. I was not shown the saving account passbook very often.
In today generation, the whole scenario has changed. Parents not only bring their children to banking hall to open bank saving account and also teach them about saving account passbook, saving account interest rate and some even let them have an ATM card.
Bank Saving Account
When parents teach their children how to saving money, they are actually teaching the the first step of managing personal finances involuntarily. Bank saving account is the simplest and easier form of financial investment. The main advantage of such account is that you can open it with as little as a dollar and your balance is usually up to date. There is no cost in maintaining this account.
You do not need any monthly statement. You are given a saving account passbook. Bank saving account usually pays low interest which is often below the inflation rate.
Per recent survey done, the bank saving accounts comprise of about 10% of total bank deposits compared to more than 40% twenty years ago. The main reason for the drop in such accounts is because when children grow up and start working, they are more aware of the other investment options.
For people who do not have plenty of cash to play with, bank saving account is the logical choice.
The saving account interest maybe calculated daily or monthly. Some maybe calculated on the full balance or it may be tiered. For example you might get an annual rate of 2% on the first $1,000 and then 3% on the next thousand.
The following summarized the advantages and disadvantages of a bank saving account :
Advantages:
1. Low opening balance
2. Easy to open
3. No age limit
4. Zero cost or minimal cost
5. Risk free.
Disadvantages:
1. Low interest rate.
2. Must present passbook when withdrawing cash from counter.
3. Not very convenient especially moving big amount of cash.
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