Financial education is the building block for money management. In today’s time, it a vital instrument that college students must possess. It enables them to work towards their financial well-being by learning the value of money. Students can also sharpen their understanding of spending and saving money wisely. This can be done by using various financial tools, such as opening a savings account in a bank or any financial institution.
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What is Savings Account?
A savings account is a bank account where customers can deposit money and then withdraw an amount as and when needed. The bank or the financial institution pays a certain amount to the customer for depositing the money. In simple terms, this amount is called interest. By opening a savings account, university students can gain good financial literacy to tackle various monetary challenges in life.
Students can start a savings account at either traditional banks or neobanks like NuCash. By opening a bank account online through nucash.money , students can save time and effort and get associated with a simple and friendly banking experience.
Let us look at how opening a savings account can help to inculcate good financial habits.
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1. Helps to Understand Savings
A savings account helps to save money and also earn interest on the deposited amount. This is one method of increasing your wealth and achieving your financial goal. By putting aside some amount in the savings account every month, students develop the habit of saving. It is a good step to start because it offers greater financial security for the future.
Thus, college students should learn about the importance of savings. It can make them financially independent and capable of fulfilling various needs and wishes.
But, before zeroing in on a bank to open a savings account, compare its financial health and the interest rate offered on it. This entire exercise is enough on its own to help college students become financially aware. Gradually they learn about savings goal and how to attain it through various means.
2. Instills Financial Discipline
Being organised and disciplined are important virtues in life. These help you remain focused and reach your goal on time. And the same holds for financial discipline as well. By inculcating this virtue, college students can learn the skill of controlling their money and meet their financial goals without many hiccups. It prepares them for life by making them stick to a proper financial plan through self-control.
A savings account is just one such financial product, with the potential to train students to become financially disciplined. By putting money in the bank account, you understand all about savings. You get to understand that planned spending and savings can go a long way in helping you improve your financial health.
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3. Introduces to Banking and Lending
Handling a savings account is a fantastic way of getting to know other aspects of finance, such as banking and lending. This knowledge is vital for managing and saving your money and maintaining a healthy financial position. So, the students get to know about various types of banks, bank accounts, interest and interest rates.
With this, students can get acquainted to different financial terms. And also learn how they function and their impact on our money. Another saving tool directly related to a savings account is a fixed deposit. Here, you put your money untouched in the bank for a fixed tenure and earn interest on it.
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If you have an account, the bank also offers debit cards and credit cards. These cards open the window to a new learning sphere called lending or loans – their types, purposes, interest rates associated with them and other facilities. Breaking it down, the types of loans are education loan, personal loan, vehicle loan and home loan. In-depth learning about loans is a must to avoid any debt or monetary trouble later.
Students can start by familiarising themselves with personal loans specially created for them. To help students avail financial assistance when needed and fulfill various needs, including lifestyle needs, NuCash has come up with instant personal loans for students. You can visit nucash.money to avail loans for a reasonable fee. There are no hidden costs involved in this process.
Another aspect of finance to learn from a savings account is the tax that you have to pay if you earn interest from the savings account. In some countries like Australia, international students also need to file tax returns. A certain amount of tax is also levied on the good and services that we buy or avail of. So it is best to be aware of the tax rules in order to spend your money judiciously and manage it well.
Q. What is tax?
Tax is an amount of money that you pay to the government on your various income sources or for the goods and services bought or availed. Overall, the collected tax is used by the government for various welfare purposes in the country.
Q. What is a neobank?
Simply put, a neobank functions like any other usual bank, but it functions purely online. It does not have any physical bank branch. You can access the bank through their app or can use a smart phone or an internet-based device
Q. What do you mean by filing tax returns?
Tax returns is a documentation submitted with the tax authority with details of your income, expenses and other financials.
Q. What is the tax paid for the interest earned on savings account?
Interest earned beyond Rs 10,000 from a savings account is taxable under Section 80TTA of the Income Tax Act.
Q. What are different types of savings account?
The different types of savings account are:
> Regular/Basic Savings Account
> Savings Account for Seniors meant for individuals over 60 years of age
> Women’s Savings Account meant for women
> Salary Account meant for individuals getting regular salary for their work
> Minor Account meant for children below 18 years of age
> Student Account meant for students only
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