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If you want to save for retirement effectively and have cash on hand in an emergency, open a savings account.

According to a September GOBankingRates survey, 72 percent of millennials have less than $1,000 in savings. Many publications — including The Wall Street Journal, the New York Times, and CNBC — have published dozens of stories in the last few years about Americans’ lack of funds set aside for emergencies or retirement.

Don’t be that person with no savings who gets slapped with a hefty medical bill before he’s gotten health insurance. Don’t be that person who waits until he’s 30 to realize, “Oh yeah, I should probably start saving for retirement.”

Fortunately, savings accounts are pretty easy to set up. Some banks and credit unions actually require you to open a savings account before opening a checking account. Chances are, you can probably set up a savings account online with your bank, if you haven’t already. If not, call and ask for next steps or just stop by your bank.

The main difference between a savings account and a checking account is that you can’t access the money in your savings account unless you physically go to your bank (or an ATM) and withdraw the money as cash, whereas you can access money in a checking account via a debit card or personal check. Savings accounts, as the name implies, are for saving money, not spending it.

You can probably see why it’s hard for Americans to save money if they’re trying to “save it” in a checking account: money in your checking account is for spending, paying bills, down payments, etc. It’s in a constant state of flow. Money in a savings account, however, stays put unless you go through the trouble of driving to your bank or the nearest ATM to withdraw — and that’s why you need a savings account.

If you discipline yourself to regularly make deposits into your savings account, you’ll be far less likely to spend that money, and it’ll stay put as your emergency savings and supplement your retirement fund.

To those of you who already have savings accounts: start depositing money into it. Sure, you’re probably living paycheck to paycheck, but if you can get into the habit of putting just $5 into your savings account every month, you’ll cultivate the discipline you need to set aside larger amounts of money when you have a full-time job.

Before you know it, you’ll have saved enough to actually be prepared when life happens.

  • disqus_odKVC5cL1k

    Being contrary to the story, having more than 1000 in savings if you have debt is not efficient use of money. Similarly, going beyond matching on retirement accounts, while paying off debt is also not wise. So, learn to live well under what you make, and the money will take care of itself. Right out of school, that house you left to go to school, don’t expect to move into one just like it, not going to happen. Don’t go buy a new car because you suddenly have a paycheck. A new grad got his first real paycheck, and still living in the cheap apartment from college thought, wow, I can afford a huge car payment, saw what that payment turned into as a car price, and went looking at Maseratis, sure every new grad needs a 75k car.

  • George Gibbs

    “Living paycheck-to-paycheck” has become a farce of a phrase as applied to young people (myself included) in this time. Let’s be real. If you can attend college in the first place, you are reasonably well-off. My paycheck is not huge, yet less than 3 years post-grad I have almost zero debt, $10,000 in savings, and $30,000 in my IRA. Here’s a simple tip for everyone: Don’t spend money like there’s no tomorrow. What you want is not what you need.