We are covering our last Savings account! After this episode, I have a few more discussions about savings and after that, we are moving to retirement accounts, which is a form of savings, but very different.
Today’s episode is all about specialty savings accounts.
What is a Specialty Savings Account?
Unlike the other savings accounts that we have looked at, a specialty savings account isn’t one particular account. It’s a catch-all phrase for any other type of savings accounts that you might have that don’t fall into the ones we have talked about.
A specialty savings account is a very specific type of account for a very specific saving goal. This account might not even be for a goal, but for a person.
Let me explain a little more.
There are savings accounts that you can open up for your children if you have children like a kid’s savings account, custodial savings account, student savings account, and a 529 college savings account.
Then there are accounts for other goals, like a Christmas Club saving account, a home down payment savings account, and a Health Savings account (also known as an HSA).
Then going into retirement accounts, Traditional and Roth individual retirement accounts (also known as an IRA) are a type of specialty savings account. I’ll cover traditional and Roth IRA’s later because these two accounts need their own dedicated episode.
The names of these accounts should give you a pretty good idea about what these accounts are for and how one would use them.
Choosing a Specialty Savings Account
When choosing a specialty savings account you want to think of your financial goals. Do you have children? If you do, do you want to set them up for college or for their own savings account? If you are working, do you have the ability to open up an HSA, or do you want to start planning for your retirement by opening up an IRA?
Once you know what account you want, do your research on the different banks that offer these accounts. We’ve been doing this with all of our accounts, so you should know the main features of an account we are looking for – minimum balance, maintenance fees, withdrawal limit, and any other special considerations for these special accounts.
Specialty savings accounts are great if you have a very specific financial goal or person you are saving money for. They are so specific that you know exactly what this money will be used for in the future.
Like all savings accounts, these accounts do earn interest, so you know your money will grow as well as be safe.
These accounts tend to have low or no monthly maintenance fees, which we know is something to always consider when choosing an account.
Certain specialty accounts, like IRAs, HSAs, and 529s, have very strict rules when it comes to withdrawals. Make sure you know these rules before opening up one of these accounts.
While these accounts do earn some interest, they don’t earn the most interest. A high yield savings account will earn more interest than most specialty savings accounts, but that might not concern you too much if you want to open a specialty savings account for a very specific reason.
There are also restrictions on who can open these types of accounts. You need to do some research on this because each account is different.
How to use
I haven’t gone over the specific specialty savings accounts because they each really deserve their own episode and I’ll be covering that in the future, but I do want to point out a few accounts that some of you might be able to consider.
If you are in High school or college and working a part-time job, I highly encourage you all to open a Roth IRA account. I will go into Roth IRAs in a few weeks, but these accounts are the secret to building wealth. If you can open up one of these accounts when you are 16 and continue maxing out what you can contribute each year, then you’ll be a millionaire in no time.
If you have a full-time job, see if your job offers an HSA plan. I have an HSA with my last job. I don’t currently use it because I don’t have any health spending planned. A great thing about an HSA is that you can use this money for future medical expenses. So while I have this account at 26, I may plan to use it when I’m 70 if I ever need money to pay for a surgery!
If you have a family, you might want to consider a 529 college savings account to start saving for your children’s college tuition. It’s never too early to start saving for college!
Let me know, do you have a specialty savings account? I just have a Roth IRA and an HSA. Those two accounts are the right accounts for where I am in life.