Our 20s — the decade when most of us begin our professional careers — can be a difficult time for our personal savings. There's so much to do — and let's be honest, so much to spend money on - that setting some money aside often falls down the list of priorities.
Parents and grandparents looking for ways to encourage 20-somethings to begin saving might be well served by discussing the advantages of a money market account. In fact, many financial planners often recommend money market bank accounts as a smart way for anyone to help build a savings cushion for emergencies or other unexpected needs.
"If you're just starting out, you need to have the emergency fund — that's most critical; that's the first [step]," says Fred Amrein, the principal certified financial planner at Amrein Financial in Wynnewood, Pennsylvania, who spoke to Ally Bank in a recent interview.
Because deposits in money market accounts at most banks, including Ally Bank, are FDIC-insured up to the maximum allowed by law, they're generally a very safe place to save. But for 20-somethings, one of the big attractions of a money market can be its flexibility.
Money market accounts at Ally Bank allow you to write a limited number of checks and make a limited number of electronic withdrawals or transfers per month. We also allow unlimited withdrawals through an ATM. That freedom can be particularly attractive to those just starting out, especially if they're worried about needing money unexpectedly.
Parents also might strike a chord with 20-somethings by pitching the advantages of opening a money market account at an online bank.
A survey by the American Bankers Association (ABA) found that online banking is far and away the most popular option for those in "Generation Y" (people in their 20s and early 30s). "Online banking is the future of banking as more Generation Yers enter the marketplace," says Nessa Feddis, ABA vice president, senior counsel and retail banking expert.
Once you've convinced your 20-somethings to start building that essential emergency reserve, Amrein suggests talking to them about the value of further savings, including a Roth (or Traditional) IRA, as well as certificates of deposit (CDs), both of which can be an important part of a balanced long-term savings plan.
While you're doing all this convincing, you also might find you've convinced yourself to take another look at the savings options available here at Ally Bank. We offer money market accounts, CDs and IRAs with rates that are consistently among the most competitive nationwide, based on rates as published by Bankrate. And as an online bank, we're always open to answer your questions, either at Allybank.com or by phone at 877-247-ALLY (2559), where live customer care is available 24/7.