Savings accounts are for children, right? Not any more! A savings account is a powerful tool in mastering your budget. Let me explain. A savings account is like a vacuum cleaner for all of your spare change, extra and unexpected income, tax refunds, etc.

Here’s how I use my savings account. It’s at my primary bank but it’s not connected to any other account. Of course I can jump online and transfer money into it from my checking account but it’s not for paying bills or anything like that. What I do is add money to it whenever I get unexpected or extra money. For example, about 18 months ago I got a $13 check for some class action suit that I didn’t even know I was part of. I almost threw away the envelope because it looked like a bill but when I opened it there was a check from some court administrator.

If I get a refund from something I deposit it in my savings account. If I get some birthday money or any unexpected money I deposit it in my savings account. As you can see, the account has two basic qualities. It’s for money that I didn’t expect to get and the money isn’t earmarked for any specific purpose. I only have a few hundred dollars in the account after two years but it’s better than nothing. Another cool thing about having a savings account is that once you have one, it’s easy to deposit $5 or $10 in it. But if I didn’t have it, that money would probably just get spent at a restaurant.

As you can tell, the account is basically a holding place for spare change and accidental, or “found” money. I plan to keep adding to it and then transfer the money into my IRA. Then I’ll do it again.