7 Savings Accounts Every Adult Needs to Have

7 Savings Accounts Every Adult Needs to Have IMG
Fiona Staff1/20/2023

There are many different reasons you might want to save money. For instance, you could be storing those dollars for a specific purchase in the future or simply setting aside funds for the proverbial “rainy day.” 

When it comes to securing your savings, it can be easy to just assume that your money should all go into “your standard savings account” (or even under your mattress). In reality, though, the average American should actually have more than one savings account, rather than a single catch-all.

Here are the seven different types of savings accounts that every adult should have, and why each one is important.

1. One for Emergency Savings

Sometimes, life just happens. The car breaks down, the dog swallows a sock, your kid breaks an arm, or the hot water heater starts leaking into your garage. If the unexpected happens tomorrow, are you financially prepared? 

More than half of Americans would be forced to turn to a credit card or other form of debt for an emergency expense over $1,000, according to recent data. Rather than going into the hole for these unexpected costs, establishing an emergency fund can help you weather any storm you might encounter.

Your emergency savings account should be readily accessible, so you can withdraw what you need fast. A savings account connected to your existing checking account, for example, can make for quick transfers, whether you’re at the auto body shop or an after-hours vet.

2. One for a Financial Safety Net

An extension of the emergency fund, this account should aim to hold anywhere from three to six months’ worth of living expenses. While this might take you a while to save up, having that kind of a safety net can float your family along whether you lose your job, fall ill, get hurt, or are affected by a worldwide pandemic or recession. 

This account can be tucked away somewhere, since you probably won’t need immediate access to the funds. You could consider putting this money in a certificate of deposit (CD), money market account (MMA), or even a high-yield savings account at a top institution.

3. One for Short-Term Goals

Whether you’re planning a family vacation or just want to get a jump on next year’s holiday spending, a savings account can help you meet short(ish)-term goals. 

By setting aside a designated account, you can ensure that your savings are earmarked for a very specific goal. This also makes it easier for you to track your progress and ensure that you meet your goals.

Short-term goals might be easier to define, so you can often set up automatic transfers into these accounts each month. For instance, if you need to save $500 in the next eight months, automatically transferring $31.25 every two weeks will get you there — and with less of an impact on your finances.

A high-yield savings account can be an easy way to manage this money, and would also net you the biggest return while the balance grows.


4. One for Long-Term Goals

Next up, we have the bigger goals that you need to start saving for today. Think of things like the down payment on a future home or your kids’ college tuition. 

In some cases, you might want a specific type of savings account, like a 529 plan for educational expenses. For other goals, though, a CD, MMA, or high-yield savings account could be a great place to tuck these funds away where they will earn a higher interest rate, until you eventually need them.

5. One for Retirement

Retirement is the single-biggest savings goal most people will ever have, and it takes many years of dedication to get there successfully.

For retirement savings, there are a number of different savings accounts to consider. You could get one or more of the following, depending on your job, savings rate, and risk tolerance:

  • Employer-sponsored 401(k) plan

  • Tax-advantaged individual retirement arrangement (IRA) account

  • Investment portfolio

  • Tax-advantaged 403(b) plan

If added benefits are available to you — like a tax deduction on retirement account contributions or even a savings match from your employer — be sure to maximize these accounts. Otherwise, consider the different types of investment accounts that can help you both save and compound your efforts toward retirement.

6. One that Earns You the Most Money

Any time your money is just sitting and waiting to be used, you should make sure it’s in an account that’s also earning a return. The higher the return, expressed as annual percentage yield (or APY), the more free money your savings will make for you.

Nearly all savings accounts earn interest, but high-yield savings accounts, CDs, and MMAs may earn a higher return than basic savings accounts. Be sure to shop around for the best APY and decide which account is right for you based on factors like fees, penalties, and when you plan to use your money.

7. One that Keeps You from Spending Your Savings

For many people, having a savings account that’s easily accessible and visible can be tempting. Instead, you might want to opt for a savings account that isn’t at your everyday bank so it’s a little “out of sight, out of mind.”

By putting an extra step between you and that money — even if it’s just a few days’ wait for an ACH transfer — you may be able to save yourself from impulse purchases or overspending.


What to Look for in a Savings Account

So, which savings accounts are right for you? The answer is different for everyone, depending on your personal goals, financial situation, and even location.

You’ll want to look at factors such as the account’s:

  • Return (the higher the APY, the more it’ll earn)

  • Fees (no or low fees are best, or try to find an account that offers ways to waive them)

  • Accessibility

In some cases, you might be able to combine two or more of these goals into one really great savings account.

Bottom Line

Your grandparents may have hidden their cash in the freezer, but you might want to consider opening a few savings accounts instead. With the right accounts, you can allocate funds toward many different short- and long-term financial goals, all while compounding your savings with interest and returns.

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