You can grow your money significantly and achieve financial security with minimal risk using a savings account, especially one that offers competitive interests. But first, what is financial security? 

Financial security means having enough money to cover your essential expenses and weather unexpected financial challenges, even if you experience a job loss. 

When it comes to growing money, investments usually steal the spotlight but never underestimate the power of a high-interest savings account. While it may not offer the same returns as the stock market, having a savings account should be an important part of your financial strategy. 

Savings accounts provide safety, security, and accessibility for your money. Simply put, it is a safe place to keep your money in case of emergencies and towards short-term goals, or that dream vacation.

Let’s get into how a savings account can be a reliable way to grow your money gradually, while you enjoy financial security and accessibility.

Benefits of a Savings Account

1. Interest that compounds: Having a savings account allows you to grow your money over time with accumulated interest. So, if all your money is kept in a box under the bed, you're missing out.

   You should only keep enough in your main account to cover your regular day-to-day spending. Any extra money you won't need right away should be tucked away in your savings account so you can earn interest.

   Do your research and select a bank that offers at least 12% percent on your savings because very few offer high interest rates on savings accounts. 

   The beauty of compound interest lies in consistent and steady growth. The interest you earn on your savings can be re-invested, earning interest on the interest itself. This means your money grows at an accelerated rate over time. 

   

   2. Security and Stability: Savings accounts are a reliable and secure way to store your money. Banks in Nigeria are usually insured by the Nigerian Deposit Insurance Corporation (NDIC), as opposed to investing in markets where your money may be lost. 

   This means that the NDIC will secure your savings even if the bank experiences financial difficulties.

   Savings accounts are a reliable way to protect your hard-earned money since they provide you a sense of comfort and stability knowing that it is protected.

   

   3. Readily Accessible Funds: Money kept in a savings account is liquid. You can withdraw it anytime you need it. However, you run the risk of losing accumulated interest if you do this. In case of any emergency, you can easily transfer money to your main account and cater to your expenses.  

   With a savings account, your money is readily available whenever you need it,  be it for an unexpected expense or a dream vacation. This flexibility makes it ideal for building an emergency fund or saving for short-term goals.

   

   4. Achieve short-term goals: If you're saving for short-term goals like starting a business, wedding, vacation, moving out of the country,  etc. it's best to keep them in a savings account instead of investments.

   Investing involves a risk of losing money even if it can yield better profits. Stock prices typically vary and the market is so unpredictable. Stocks should be long-term investments for the best chance of success.

   You don't want to run the risk of losing your money if you need the money in the next few years. Until you meet your savings goal, keeping your money in a savings account is a risk-free option.

   You can even set up multiple group savings accounts on the Bankly app to achieve short-term shared goals with friends and families. For example, you can have separate accounts for your wedding, vacation with friends, etc. This will help you achieve and track separate goals more easily.

   

   How Does a Savings Account Interest Work?

   Savings account interest works through a compound effect. 

   The bank typically pays you a percentage of your account balance for keeping your money with them. It's called 'interest per annum'. The interest earned compounds daily and is added to your account balance and becomes part of the new balance that earns interest the next year.

   How Much Should I Keep in my Savings Account?

   The answer to this question cannot be answered in a generalized way. However, we recommend that you aim to have three to six months' worth of living expenses in your savings account. At the end of the day, the ideal amount to keep in your savings account depends on your individual financial goals. Here's a breakdown to help you decide:

   Emergency Funds: Financial experts recommend saving 3-6 months' worth of living expenses in your savings account. This acts as a safety net in case of unexpected events like job loss, medical bills, or car repairs.

   Short-Term Goals:  Savings accounts are also great for saving towards short-term goals like a vacation, gadget expense, or car repairs. Determine the timeframe to achieve your goal and how much you need to save regularly to reach it.

   Accessible Funds: If you’re team "I need to have access to my savings" as opposed to having it locked up, then this is for you. Savings accounts are liquid, but if you’re more comfortable with having unrestrained access, consider keeping a smaller amount in your savings and the rest in your locked account for easy transactions.

How to open a savings account with Bankly 

1. Download the updated Bankly App from the App Store or Google Play Store 

2. Sign up using your phone number and provide your BVN and NIN, to complete your registration

3. Log in to the App and go to “Individual Savings”

4. Tap “Start Saving”

5. Set a savings goal

6. Enable the “Yes, I want interest” option

7. Fund your wallet and start saving

   Now that you understand the power of savings accounts, it's time to put your money to work! Consistency is the only way to harness the power of compounding interest. The more frequently you save and the longer you keep your money saved, the faster your money will grow.

   Platforms like Bankly understand the importance of maximizing your savings potential. That's why we offer a competitive 12% interest on your savings, letting your money work hard for you.  Choose Bankly as your partner in building a secure financial future. Download the app and open your savings account – it's free and takes less than 5 minutes!

   Bankly Microfinance Bank is a lifestyle bank that provides everyday people with valuable financial solutions to move them forward through the different stages of life. Since operations in 2019, Bankly has been the preferred choice of over 12 million individuals and enterprises in Nigeria, facilitating their financial growth through banking solutions that make business sense. The bank is licensed by the Central Bank of Nigeria (CBN), protected by the Nigeria Deposit Insurance Company (NDIC), and registered with the National Association of Microfinance Banks (NAMB).