Savings Account
A savings account is a bank account used primarily to hold money for future needs, financial goals, or emergencies.
Unlike a checking account, which is commonly used for everyday payments, a savings account is generally intended for money that is not needed for immediate spending.
The exact features and restrictions of savings accounts vary between financial institutions and countries.
Money in a savings account
Money can enter a savings account through:
- Transfers from a checking account.
- Deposits.
- Interest payments.
- Transfers from other accounts.
A transfer from checking to savings does not represent new income. It simply moves existing money from one account to another.
Money out of a savings account
Money can leave a savings account through:
- Transfers to a checking account.
- Transfers to another account.
- Withdrawals.
- Other account transactions.
Moving money from savings to checking is not spending. The money may be spent later when it is used to pay for something.
Savings transfers and financial tracking
Transfers between your own accounts are important when tracking household finances.
For example, if you move €1,000 from checking to savings:
- €1,000 is money out of checking.
- €1,000 is money in to savings.
- Your total cash has not changed.
- No new spending has occurred.
- No new income has been received.
Treating the transfer as spending would make your financial activity appear higher than it actually is.
Savings accounts and budgeting
Savings transfers can be part of a financial plan even though they are not expenses.
For example, a household might budget to save €500 each month. Moving €500 from a checking account to a savings account changes where the money is held, while the savings goal describes what the household intends to do with that money.