We’ve recently written about two ways to help folks save more at tax time.

One is to split your tax refund – put some of your refund into a savings account and some into a checking account; the other is to be encouraged to “pledge to save” before even doing your taxes. This latter idea, the nudge, went through a trial run this last tax season. One of the things that EARN and Commonwealth (the groups who did the trial run) discovered was that refunds deposited into savings accounts stayed in the accounts longer than funds that were deposited into checking accounts.

This data got us thinking about other ways we use checking and savings accounts and whether the use of one over the other really does impact our savings rates. But, first some background…what’s the difference between a checking account and a savings account?

The most basic difference is that a checking account is more for your regular spending needs, e.g.,paying bills, buying groceries, etc., and a savings account is best for stashing away money that you plan to use for something down the road, e.g. emergencies, education, downpayment on a home, etc. Many savings accounts also come with higher interest rates, making them more attractive for those wishing to earn a little on the money they are putting away.

Yet even a little interest isn’t enough to get a lot of folks to open more than a checking account. “Why bother?” they ask. Well, behavior economics…that’s why!

Remember when we talked about out-of-sight, out-of-mind? In other words, if we never see the money in our checking account, we are much less likely to spend it,i.e., we’re more likely to SAVE IT!

That separation between savings accounts and checking accounts is important because you are more likely NOT to spend it if it is in a savings account – “…[someone who saves to] a savings account is 11% more likely to successfully save$20 each month compared to someone who uses a checking account… .”

So the takeaway is simple, you’re more likely to actually save if you have a savings account in addition to your checking account, which makes it much of a partnership than a showdown!

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