When it comes to managing your finances, it’s important to be organized. One way to do this is by keeping your salary account and savings account separate.
A salary account is a bank account where your employer deposits your monthly salary or wages. This account is typically used for day-to-day expenses, such as paying bills, making purchases, and withdrawing cash. On the other hand, a savings account is a type of bank account where you tend to keep your savings and earn interest on your balance.
Now, let’s look at 8 reasons why it is prudent to keep these two accounts separate:
Helps you manage your money better
Having separate accounts for your salary and savings can help you track the expenses and savings. You can easily monitor your monthly expenses and plan your savings accordingly. This will help you avoid overspending and ensure that you are saving enough to meet your financial goals.
Avoids unnecessary expenses
When you have a salary account and a savings account, it is less likely that you will use your savings to pay for your daily expenses. This will help you avoid unnecessary expenses and use your savings for the intended purpose.
Protects your savings
In tune with the previous point, keeping your salary and savings accounts separate can help you protect your savings. If you use your salary account for all your transactions, you may unintentionally overspend or use your savings. By keeping your savings separate, you can ensure that your savings are safe and secure.
Eases tax filing
Separating your salary and savings accounts can make it easier to track your income for tax purposes. This can be particularly important if you have multiple sources of income or if you are self-employed.
Some companies offer employee benefits like health insurance, retirement plans, or stock options. These benefits are often tied to your salary account, so keeping your salary account separate can make it easier to manage these benefits and ensure that you are taking full advantage of them.
Helps you plan for emergencies
A savings account is an excellent tool to prepare for emergencies. By keeping your salary and savings accounts separate, you can make sure that you have enough money in your savings account to meet any emergency expenses.
Encourages disciplined saving
By keeping your salary and savings accounts separate, you can encourage yourself to save more. You can automatically transfer a portion of your salary to your savings account every month, ensuring that you save regularly and in a disciplined manner.
To wrap up
Keeping your salary account and savings account separate is a smart financial move that can help you better manage your money, maximise your savings, and achieve your financial goals. It is easy to open both accounts and keep them separate. Doing so will offer several benefits in the long run. If you haven’t already, consider opening savings account and start keeping your salary and savings separate today.