You need to understand a few facts about banks, first of all, your money will lose value if you save money in the bank, especially during inflation. Secondly, you don't get a good return on your savings accounts, there is a cap on how much money in your account can be covered by insurance, and anything above the cap is at the risk. However, this does not mean bank accounts are useless, you should start building your savings by depositing money in your bank. You will then have to move your savings to your investment account and start investing money.
The banks are the best platforms if you want to manage your money properly. It will help you spend wisely, invest, and save.
If you spend your cash, you cannot track your spending, therefore, you wouldn’t know how much money you spent for what categories. When you spend through banks, either through Credit Cards, Debit Cards, or Direct bank Payment, you can track your expenses. Managing money is easier if you know how you are spending it.
If you are investing money in the stock market, you need a DEMAT account, which is an account in a bank that holds financial securities in digital form to make trading and investing in the stock market easier.
Whether you want to build emergency funds or retirement funds, banks are the ideal platforms. However, you need to save in high-yield savings accounts.
Therefore, you need multiple bank accounts and you need skills to create a budget in order to manage these accounts.
Before I give my opinion on whether anyone can become a millionaire by saving money, I am going to share a quote from Robert G. Allen. “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”
Robert G. Allen, a bestselling author of numerous books, is an investment advisor.
Despite what Robert G. Allen has said I think you can actually become a millionaire by saving money. Here are two simple strategies to become a millionaire just by saving money.
You save $50 every month and every year you increase your saving amount by 10-15 percent. You save your money in a high-yield interest-bearing account and you compound your saving (you don’t withdraw your profits). If you continue to do this for 25 years, you will become a millionaire.
If you keep $10K in a fixed deposit bank account (where you can earn 10-12 percent interest rate) for 20-25 years and you never withdraw your profits, you will become a millionaire.
The key to becoming a millionaire is patience. You need to either continuously save money for a long time or you need to save large amounts of money and let it compound. Growing wealth through saving is the least risky method.
A lot of people believe that you don’t need a lot of bank accounts, you can handle everything from one account. However, there are also people who believe you need multiple bank accounts to manage your cash flow. I belong to the second category and if you also belong to the category of people who believe you need multiple bank accounts the main question is how many bank accounts you actually need.
In my opinion, you need at least 5 different bank accounts.
You need a primary bank account where you receive your paycheck, an account where your employer sends your salary. Once you receive money in your primary bank accounts, you need to distribute your money into different bank accounts.
You need to set up an account for spending funds. You will be using this account to pay your daily bills and other expenses such as paying for credit cards, loans, etc. This account is for necessities.
You need to set up an account for emergencies. You need enough money to keep you going for 3-4 months even when you don’t earn a single penny.
You need an investment account. This account will be attached to your stock broker.
You also need an account that you can use to spend on luxuries such as buying an expensive gadget, going on a vacation, etc.