Banking Basics, But Make It Fun

5 minute read

Hey Girlies! Welcome back to the second post of the “So I just Graduated” series. Today, we’re diving into bank accounts. I know, I know – everyone has one, so why are we talking about it? Because not everyone really knows how they work! And a few savvy moves can make your bank accounts work for you, not against you. Ready to become a banking pro? Let’s do it!

1. The Basics: Checking vs. Savings Accounts 💳

The Checking Account

Your checking account is where the “everyday” action happens. It’s where you keep the cash for daily stuff – like groceries, bills, and a night out with the girls. You’ll access it with your debit card or digital wallet, but remember: no interest here (pun intended). That means only keep what you’ll need for the near future!

Pro Tip: Fees are a no-go! ❌ Some banks sneak in fees (overdrafts, monthly maintenance, ATM fees) – so ditch those accounts. Plenty of fee-free options exist!

Example: Meet Sarah, our new grad girlie. She keeps just enough in her checking to cover monthly expenses, thanks to a bank account with zero monthly fees and a low-balance alert (bye-bye, accidental overdrafts!). The rest of her money? It’s growing in interest somewhere else.

The Savings Account

This one’s for the long haul. A savings account is where you stash money for bigger goals like an emergency fund, travel, or a future big purchase. Here, banks do pay interest, meaning you get extra cash just for letting it sit!

Pro Tip: Look for a high APY (Annual Percentage Yield). The higher the APY, the faster your money grows. And keep your savings separate so you’re not tempted to dip into it. 🙅‍♀️

Example: Sarah is saving $5,000 for her dream Europe trip (because #EuroSummer) and parks it in a high-APY savings account offering 4% interest. After just 6 months, her money earns approximately $100 in interest, giving her a total of $5,100. While it’s not a huge amount, it’s free money she can put toward her flights, hotels, or an extra splurge on gelato in Italy. When she’s ready to book, she’ll have extra cash from just letting it sit in the bank!

Next Level Savings: Money Market Accounts & CDs 💰

If you’re serious about building your savings, here are two more options:

Money Market Account : Think of it as a savings account on a little boost. It usually comes with check-writing and it generally pays more interest than regular savings accounts, but some have minimum balance requirements (like $1,000 or more).
- Example: Sarah, our hard-working queen, got a $15,000 bonus at work and wants to keep it safe while letting it grow. She opens a money market account, which earns an APY of 4.5%, significantly more than the average 0.43% offered by regular savings accounts. By the end of the year, her $15,000 will grow to $15,675—earning her $675 in interest—while still being accessible if she needs it in a pinch.
Certificates of Deposit (CDs) : A CD is a savings account on lockdown. You put your money in for a set time (like 1–5 years), and it earns a higher fixed rate. But you can’t touch it until it “matures,” or you’ll face penalties. This is perfect for long-term goals.
- Example: Sarah is planning to buy a house in five years. She opens a 5-year Certificate of Deposit (CD) with a $20,000 deposit and locks in an annual percentage yield (APY) of 5%. Over five years, her investment grows steadily, earning her approximately $5,525 in interest by the end of the term. She now has $25,525—just in time to boost her down payment savings! 🏠

2. Before You Open an Account: The Checklist 📝

FDIC Insurance 💪 – FDIC insurance is like a safety net for your money. If your bank ever goes under, it guarantees you’ll get up to $250,000 of your money back.
Check for Fees 💸 – Monthly fees, overdraft fees, ATM fees – these are icks. Look for banks with zero fees or easy ways to waive them.
APY (Annual Percentage Yield) 📈 – A higher APY helps your money grow faster. Even for checking accounts, some banks offer a little interest, which is worth considering.
Sign-Up Bonus? 🎉 – Some banks offer cash as much as $300 for opening an account – don’t leave free money on the table! But only if the account makes sense otherwise.

3. Inflation: Why Your Money Needs to Grow 🌱

Okay, let’s talk about inflation. Remember when your favorite snack used to be $1 ten years ago? Lol, me neither. But let’s pretend it was. Now imagine that same snack is $1.20 today. That’s inflation—your money buys less over time. Inflation is around 2% yearly, so if you want your savings to keep up, you need an APY that’s higher than inflation. That way, your money doesn’t lose value over time.

4. Should You Keep All Accounts at One Bank? 🤔

Keeping everything at one bank sounds easy, right? One app, one statement, and maybe perks like waived fees. But it’s not always the best. Some banks have great deals on checking, others on savings, so mixing and matching could get you more interest and fewer fees. Plus, if your savings are separate, it’s harder to dip in for impulse buys (we’ve all been there 😅).

5. Taxes on Savings Accounts: The Yawn Factor That Actually Matters 😴

Yes, interest earned on your savings is taxable. If you earn more than $10 in interest, your bank will send you a 1099-INT form, and you’ll owe tax based on your tax bracket. So make sure the interest you’re earning outweighs taxes and inflation – otherwise, it may not be worth it.

Example: Sarah, our smart finance girlie, earned $100 in interest last year. With her 22% tax rate, she’ll owe $22 on that interest, leaving her with an extra $78. Not bad for doing absolutely nothing but letting it grow!

Thanks for reading, girlies! Let’s keep the conversation going. Got questions about bank accounts or want more money tips? Drop them below

Until next time,

Your fave finance girlie. 💖✨