• A checking account should serve as a pit stop for your money on its route someplace else, rather than the end destination lower than most lenders.

• When you put money away for a substantial purchase, such as a home or vehicle, in a high-yield savings account, you get interested in your vast sum, which helps it grow even faster.

• Separating your money into savings accounts may assist you in avoiding unintentional or easy spending while also allowing you to save for long-term financial objectives.

If you get paid by check or direct deposit, your regularly scheduled income will likely end up in a bank account.

Checking accounts serve as a financial clearinghouse, acting as a conduit for money to flow in and out of your life. However, you should have more than one form of a bank account.

As children, many of us have our first bank account in the form of a savings account. Adult savings accounts have several advantages, including more excellent interest rates, a buffer between your spending money and other finances, and assistance with cash flow management.

Here are six reasons you should store your money in a savings account rather than a checking account.

1. Increase your interest rate

Many checking accounts don’t pay interest on your contributions at all—the bulk of those who do so at reasonable pricing. My Schwab Bank checking account, for example, is excellent, but it only yields 0.02 percent to 0.04 percent interest. It’s an improvement over nothing, but not by much.

As a former bank manager and corporate finance/accounting expert, I maintain roughly a month’s worth of expenditures in my checking account and put the rest of my money in savings. The majority of it is in high-yield savings accounts at Ally Bank, Capital One, Simple, and SoFi, where it has earned up to 20 times as much as it would in my checking account (although rates fluctuate).

2. Reduced fees and requirements for a minimum balance

The most excellent checking accounts in the United States are entirely free, with no minimum balance or recurring payments. However, not all banks adhere to these requirements.

The restrictions for checking accounts might be rather strict. To qualify for free checking, you may be required to maintain a certain amount, use your debit card a specific number of times per month, or complete other requirements.

Savings accounts are designed to keep your money secure as it grows over time, thanks to interest. While Federal Reserve restrictions limit savings accounts to six withdrawals per month, a savings account should allow you to avoid costs more efficiently.

To avoid a charge, several banks have minimum balance requirements. If that’s the case, you should look for a bank that won’t charge you to retain your money there.

3. Resist the urge to spend.

Many individuals are used to spending money from a checking account. While many clever spenders use a credit card and pay off the amount with cash from their checking account, others utilize a debit card and an ATM to quickly and effortlessly take money from their checking account.

However, when money is saved, it is more difficult to spend, and it reduces the urge to make frivolous purchases.

My savings accounts are segregated from my checking and day-to-day expenditures. My emergency reserve contains the majority of my funds. I save for property taxes and insurance in a designated high-yield savings account. I keep a little money in other accounts for months when I have significant expenses to pay or for other short-term financial objectives.

4. Keep an eye on your emergency money.

One of the most significant purposes of a high-yield savings account is for an emergency fund.

According to Federal Reserve statistics, over 40% of Americans would be unable to pay a $400 emergency with cash; 27% would have to borrow or sell something to meet the cost, and 12% would be unable to cover the price at all.

Medical costs, house repairs, and broken-down automobiles may cost more than $400, so that’s only a starting point.

The majority of experts recommend putting aside at least three months’ worth of spending in an emergency fund. If you’re self-employed or don’t have a steady income, you should double that amount, putting six months’ worth of spending in savings that you can’t access.

5. Set aside money towards a critical objective regularly.

It’s a good idea to save up for a house, a vehicle, or any other large purchase before making it. Where should you put your money to avoid spending it on anything else? Of course, a high-yield savings account!

I pay $13,000 in property taxes and homeowner’s insurance every year. I set aside $250 every week in a savings account to pay those costs and keep that money from being spent elsewhere. The same technique may be used to save for a wedding, a vehicle or house down payment, or anything else.

6. Make more frequent and more significant savings.

One of the most prevalent regrets among Americans of all ages is that they did not save enough money when they were younger. I’ve never met someone who regretted their decision to keep as much as they did. It is nearly always preferable to save more money if you have the option.

Getting on a regular savings routine is the most effective strategy to prevent wasting money. You may save every month without even thinking about it if you set up automated transfers from your bank account or divide your direct deposit into different versions.

Whatever you do, don’t overlook or avoid saving, and don’t maintain too much money in your bank account. You’re making an excellent choice for your long-term financial future if you can save automatically every paycheck in a high-yield savings account.