I bet you’ve heard a million times that you need to be saving money all the time. Maybe you’ve just gotten started saving your emergency fund or are saving for a big purchase. Setting aside money for the future is a great idea, but maybe you’re worried about losing out on money by saving instead of investing. Can your savings account make money?

Yes! Today we’re going to talk about why saving money is important, how your savings account can make you money, and what accounts are a great option for stashing your cash!

Why should you save money?

Saving money gives you options and reduces stress. Those are my top two reasons for why I save money constantly, and why I always recommend others start saving. I save money for emergencies, for expenses I know are coming throughout the year, and when I’m considering large purchases.

I like to think of my emergency fund as insurance I’m providing for myself. By having money available when something goes wrong, I’m able to take care of the situation without the added stress of taking on more debt. I don’t think of my emergency fund as an investment I want to be making money – it’s just there for my peace of mind.

I use sinking funds in the same way. Sinking funds are separate savings accounts I use to save for larger expected expenses I have throughout the year. These are things like vet costs, car maintenance, Christmas, and property taxes. I also don’t think of these as money that should be generating income for me.

Even though I don’t expect to generate income, I still like free money – so I keep all my savings in a high-interest savings account. We’ll talk about those in a minute.

Why would you put money into a savings account?

So we’re talking about how your savings account can make you money, but I just said I don’t expect my savings to make me money. What the heck? Let’s talk a little about why you would put money into a savings account instead of investing it.

Saving money and investing money should be two separate activities in my mind. Saving money is to give you peace of mind, take care of expenses and emergencies, and keep you out of debt. Investing money, on the other hand, is meant to generate income by taking some risks. To me, those are opposite goals.

When you put money into a savings account you are making the choice that you aren’t going to take risks with that money. Because of that, you are never going to see the type of return you would see with the money you invest. Your savings account money should be money that is meant to be used for a certain purpose (emergencies, bills, etc.).

Investing money means taking on the risk that you could end up losing it, but it has the potential for generating income. This should only be done, in my opinion, once you have your savings taken care of and are able to take that risk without jeopardizing your financial situation.


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    What is a high-interest savings account?

    You can still make a little money off your savings accounts without taking risks with your money. This can be done by keeping your savings in a high-interest savings account.

    When you deposit money into a savings account, you usually get paid a small interest rate on that money for keeping it with that bank. You can make a little bit on this interest with pretty much any bank, but I want you to maximize what you’re earning here since you don’t actually have to do anything to get it.

    A high-interest savings account gives you a higher interest percentage than most other banks. Your local bank probably offers savings accounts with interest rates below 1%. High-interest savings accounts usually offer interest of around 2%, and some are even a little higher.

    What banks offer high-interest accounts?

    There are quite a few online banks that offer high-interest savings accounts. These banks are usually able to offer higher interest rates because they do not have brick and mortar locations that drive up costs. Since they don’t have the cost of operating branches, they pass those savings to customers.

    I personally use Capital One 360 savings accounts because they are easy to use and offer 1.50% APY. There are also some great tools like auto savings and goal tracking within the savings account platform. I actually have multiple separate savings accounts that are all linked to a Capital One 360 checking account with a debit card. This makes it easy to access my savings when I need it, but keep my different savings goals separate.

    If you’re just getting started with savings, some other great high-interest savings options are Discover Online Savings, Marcus by Goldman Sachs Online Savings, and American Express Personal Savings.

    While saving money should be more to prepare for the future and less to generate more income, saving your money in a high-interest account is a great way to make that money work for you!

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    Can Your Savings Account Make Money?