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Banks Love When You Make This Mistake

Just about everyone has a bank account. It’s how we pay our bills, buy things, and keep our money safe. Most people even have a savings account with their bank. It seems responsible.

But what seems responsible and normal can actually cause you to leave money on the table. Some of you are making mistakes with your savings and don’t even realize it. Let’s talk about a few of them and what to do instead.

Mistake #1: Keeping Your Savings and Checking Accounts at the Same Bank

On the surface, this makes perfect sense. Both accounts are in the same place, you can easily move money between them, and you can even use your debit card at the ATM. It feels convenient.

But convenience can sometimes work against you. If you’re the type who dips into your savings when your checking runs low, this setup is probably not helping you. The temptation is right there. One quick transfer and the money you were trying to save is gone.

If that sounds like you, it might be time to create some distance. You can have a savings account at a completely different bank. For example, if you pay your bills with Truist or Bank of America, you could open a savings account with a credit union or an online bank. Even better if it’s not right down the street. That bit of separation can make a huge difference, because sometimes, willpower alone isn’t enough. You might have to set up systems that make it harder to spend what you meant to save.

(Related: Download your mindful spending Money Mindset Bullet Journal — it’s your personal spending coach). 

Mistake #2: Keeping All Your Money in a Regular Savings Account

Having a savings account at all means you care about your money, and you’re already doing better than most people. But keeping everything in a regular savings account could be costing you.

Let’s say you have a fully funded emergency fund or sinking funds for things like vacations or home repairs. It’s smart to keep some cash where you can access it fast. If you suddenly need $200 or $400, you want easy access. That’s fine.

But for the rest of your money, a regular savings account just isn’t enough. Most of them pay something like 0.01% interest. If you have $10,000 sitting there, you’ll earn about one dollar after a year.

Now, if you put that same $10,000 into a high-yield savings account paying 3.5%, you’d earn around $350 in interest after 12 months. Same money. Different account. Better results.

High-yield savings accounts also make it harder to spend impulsively. Most don’t come with a debit card, and transfers take a day or two to go through. That delay gives you time to think before pulling money out, which helps you save more long term.

Mistake #3: Saving Too Much Money

This one sounds strange, but it’s real. You can actually save too much.

You should have three to six months of living expenses in an emergency fund, maybe up to a year if you feel better having more. On top of that, you might have sinking funds for vacations, home projects, or car repairs. That’s all good.

But once those goals are covered, it’s time to put your extra savings to work. I once saw a video where someone said they had $100,000 sitting in a regular savings account. Saving that much is incredible, but keeping it all in one low-interest account means missing out on growth.

You don’t need $100,000 to start investing, though. Even a small amount can make a difference. You can look into things like ETFs or index funds, which let you invest in a mix of companies instead of trying to pick one by one. They’re popular for beginners because they’re simple and diversified. (Related: Sign up for Acorns and start saving/investing your spare change in minutes)

When you invest, your money has the chance to grow over time, but it’s important to know that investments can also go up and down in value. So before you jump in, make sure you understand what you’re investing in and what your comfort level is with risk.

The Bottom Line

The fact that you’re even thinking about saving shows you’re already ahead of most people. You’re building good habits and handling your money like a pro. But there’s always room to make smarter moves.

Don’t let your money get lazy in the bank. Keep what you need for everyday use and emergencies. Put the rest in a high-yield savings account. And once you’ve hit your savings goals, start investing so your money can grow.

Your money should be working as hard as you do.