3 Reasons Not to Keep Your Savings in Your Checking Account

It's important to save money for things like emergency expenses and big purchases. But you'll need to make a decision about where you should keep the money you are saving.

It may seem convenient to just keep all your cash in the checking account where your paychecks are deposited and where you pay bills from, but the reality is there are some huge downsides to that approach.

In fact, here are three key reasons not to keep your savings in your checking account.

1. Your savings will be too easy to spend

Your checking account is the place where you keep the money you spend regularly. You'll use the money in checking for bills, but will also likely be able to access it easily by taking cash out of an ATM or by using your debit card to charge purchases.

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If you have your savings intermingled with the money you're using for your expenses, it can be too hard to keep track of what is meant to be reserved and what's left to spend.

For example, if you have $8,200 in your account but $5,500 is supposed to be saved, you'd have to subtract $5,500 from $8,200 to see what was left over to use for your expenses. Do you really want to have to do the math every time you check how much is available to spend in your account?

2. Tracking your progress on financial goals will be more difficult

If you're hoping to save money in your savings account for something specific -- like a home down payment or an emergency fund -- it will likely take you time to build that up.

You'll probably want to invest a set amount each month -- like $300 or $500 or some other figure based on your timeline and the total you need. And you'll want to check to make sure the money has gone into that account and that your balance is growing on schedule.

If you have your savings in your checking account and you have money going into this account all the time for other things, it can be hard to keep track of whether you've deposited enough specifically for your savings goal. You'll also have to do that pesky math again, but this time subtracting all of the money you're intending to use for other things to see how much is left over that's actually saved.

It's a whole lot easier to just sign into your savings account, see that you deposited the necessary amount that month, and see what your current balance is with one glance.

3. You'll miss out on interest you could earn

Finally, if you keep your money in a checking account instead of a high-yield savings account, you're going to miss out on interest that could help your balance grow.

It's reasonable to expect that you could earn around 4.00% or more on a high-yield savings account right now. If you have your money in a checking account instead, chances are you'll earn $0 in interest. If you have $5,000 saved and you earn 4.00% on it each year, that will add $200 to your account balance by year's end. You'd pass that easy (and essentially free) money up if you kept your savings in your checking account.

For all of these reasons, you should keep your savings in a savings account. Research high-yield savings accounts today, open one online, and move your money over now. That way, you can start earning interest on it and remove it from an account where it's more likely to be spent.