Be honest, how much money do you keep in your bank account? It’s common practice to keep most of your cash in a standard bank account, but is this a smart move? Before you get worried, this isn’t a post about conspiracy theories or telling you to move all of your money out of a bank. Instead, you’ll see a few reasons why it makes sense to keep some of your money in different places.
Get more for your money.
When money sits in a bank account, is sees no benefits. You might get the tiniest amount of interest, but the value of your account won’t change. Consider transferring your idle funds to a high-yield savings account for great returns and financial growth. Now, this is a problem when you consider how much money you spend. Mostly, you spend a rough amount every month, and the rest of your bank account is untouched. Instead, you can put this money to more use by investing it. Investments are so clever as your money is stored safely in an asset, and it actually increases in value.
The best thing is, there are loads of ways to invest your money. You could learn how to trade crypto, or invest in stocks and shares, invest in a house, etc. If you do not know how to trade crypto, you can learn how to trade crypto, online, or there are other resources available that can teach you how to do it. Even the act of putting your money in a savings account or retirement plan will be better than leaving it in a bank account. Why? Because you earn more interest and your money goes a lot further.
Protect your finances
What happens if someone hacks your computer and finds your bank details? If you pay with your debit card, they can now access your bank account and steal all your money. You might be able to get it back, but there’s no guarantee.
From a security perspective, putting money into different investments or savings accounts will protect your finances. Let’s say your bank account is hacked in this scenario – there’s less money to lose as most of it is tied up in different places!
Less temptation to spend
Imagine you have $10,000 sitting in your bank account. Instantly, there’s a temptation to spend your money on anything you see. You know you can afford it, so you make rash purchases. Now, imagine you only keep $2,000 in your bank account. The other $8,000 is invested or put in a secure savings account, only to be touched on a rainy day. The urge to spend is no longer there as you have to be more financially savvy. This teaches you to budget better and save money every month. As a result, you’ll have more money to invest or save when your next paycheck comes in. This starts a cycle where you spend less and save more, committing to a better financial future.
Generally, it’s recommended that you keep around a month’s worth of pay in your bank account at all times. From here, you will see how much money is left over to put in savings accounts, investments, or an emergency fund. It makes far more sense to move your money around, rather than keeping it all in one place.