If you’re a student, you must try to understand the ways you can save money and have a secured financial future. You may start your savings early so that you can be prepared to tackle any financial hardship in the near future. If you’re in debt, you can get out of it with the help of Christian debt consolidation loans. These loans may help you out of debts at lesser costs since the interest rates may be lower for the loan. These services help you save money as they offer discounts to you. But you must know the differences between an IRA and a checking account so that you can manage to know where you must save your money.
Differences between an IRA and a checking account
Student life is really an important platform and it really requires you to be on your tiptoes regarding your finances and other things. You need to responsible with your money. It generally happens that a lot of students fall prey to debts and cannot get out of the hell hole. So, if you try to save some of your earned money in the savings account, you can stay financially secured for the rest of your lives. Take a look at the differences you between an IRA and a checking account:
1. Genre of accounts
This is quite a common difference between the two. IRA account is retirement account where as the checking account is a saving account. You plan to save for the retirement and you do it in an IRA account. When you work and save in your retirement account, you save some money and your employer deposits certain amount in it. But for a checking account, you can save anytime you want and it has nothing to do with your employer, friends or relatives. It’s on you how much you save and till what time. This is not exactly for your retirement but you can consider it your retirement account. But the IRA account is for the sole purpose of your retirement.
2. Money withdrawing policy
This is also very important. If you want to withdraw money from your retirement account, you need to take out a loan for that such as a 401(k) loan. If you take out any money from the IRA account before you’re 59 and half years of age, you may have to pay 10% penalty fees. That can be a huge blow to your finances. But in case of your checking account, you can take out money anytime you want. It’s simply a bank savings account and your personal matter. You may not get the interest payment but apart from that you don’t have to pay any penalty fees or charges for taking out the amount. There is no maturity date of the amount that you deposit in the savings account.
Apart from the top 2 differences discussed above, you must also know that you can add any amount of money in the checking account and it really has no boundaries. There are rules to capital gains. This is not the case for the IRA account. There are no rules for the capital gains and the money you deposit has to earned income. The maximum amount that you can deposit is $5,000 in a year and that your income isn’t too high. These are the criteria that govern both the IRA account and the checking account.
- Opening a Roth IRA Account Today (2009taxes.org)
- Finding the Best Retirement IRA Companies (2008taxes.org)
What are the differences between an IRA and a checking account?