Banking 101: Checking vs. Savings vs. That Random Account Your Parents Opened for You

Okay so I’ll be honest—I had a bank account for like three years before I actually understood what it was for. My parents opened it when I was 13, put my birthday money in it, and I just… let it sit there. Then I got my first job and suddenly had a debit card and I was like “wait, is this the same account? Do I have two accounts? What is happening?”

If you’re confused about banking, you’re not alone. It’s one of those things everyone assumes you just know, but literally nobody teaches you. So here’s what I’ve figured out (mostly from asking dumb questions and googling things at 2am).

Let’s Start With the Basics: What Even Are These Accounts?

Checking Account = Your Everyday Money Account

This is the account you actually USE. Like, constantly.

What you do with it:

• Get your paycheck deposited here
• Use your debit card to buy stuff
• Pay bills (if you have any)
• Take out cash from ATMs
• Send money to friends on Venmo/Zelle

The deal with checking accounts:

• You can use it as much as you want—no limits on how many times you swipe your card or withdraw money
• Your money doesn’t really grow here (like maybe you’ll earn 50 cents a year in interest lol)
• Some banks charge you a monthly fee just to have it (which is annoying, more on that later)
• You get a debit card that’s connected to it

Think of it like: Your wallet. Money comes in from your job, money goes out when you buy things.

Real talk: If you have a job, you need a checking account. That’s where your paychecks go and where you spend from.

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Savings Account = Where You Park Money You’re Not Spending

This is for money you want to keep for later—like actually SAVE, not spend.

What you do with it:

• Put money aside for emergencies
• Save up for something specific (a car, college, concert tickets, whatever)
• Keep money away from your debit card so you don’t accidentally spend it
• Actually earn a little bit of interest (your money grows, but like… slowly)

The deal with savings accounts:

• You’re not supposed to be constantly moving money in and out of it
• It earns interest (anywhere from basically nothing to like 4-5% if you find a good bank)
• Usually no debit card—it’s supposed to be slightly inconvenient so you don’t impulse spend from it
• Most banks don’t charge fees for savings accounts

Think of it like: A piggy bank that’s locked in your closet. You COULD break into it, but that’s not really the point.

Real talk: The whole idea is that money in savings STAYS in savings. If you’re constantly transferring it back to checking to buy stuff, you’re doing it wrong.

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That Account Your Parents Opened = ???

Yeah, so about that.

A lot of us have some mystery account that our parents set up when we were kids. Here’s what it probably is:

Option 1: Just a regular savings account they manage

• They opened it, put your birthday/holiday money in it
• You might be listed on it, or they might fully control it
• When you turn 18, you can usually take it over completely

Option 2: A “custodial” account (UTMA/UGMA)

• This is a special account where the money is technically YOURS, but your parents manage it until you’re 18-21 (depends on your state)
• It might have actual investments in it—like stocks or mutual funds, not just cash sitting there
• Once you hit that age, it’s 100% yours and they legally have to give you access
• The upside: it might have grown a lot. The downside: you can’t touch it yet.

Option 3: A 529 plan (college savings)

• This is ONLY for education stuff—tuition, books, room and board
• If you use it for anything else, there are penalties and taxes
• Your parents control it, and it stays that way until you actually use it for college
• If you don’t go to college, it can sometimes be transferred to a sibling or even held for grad school

What you should do about it:

1. Ask your parents what type of account it is (they might not remember either lol)
2. Find out how much is in it—could be $50, could be $5,000
3. Figure out when you get access and what the rules are
4. Don’t just forget about it—people literally lose money this way

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How Much Money Should Be in Each One?

This is what I’m trying to figure out too, but here’s what makes sense:

Checking:

• Keep enough to cover your regular spending for like a month or two
• If you don’t have bills: honestly $200-500 is probably fine
• If you have actual bills (phone, car insurance, whatever): keep one month’s worth + extra just in case

Savings:

• The goal is eventually having 3-6 months of expenses (which sounds INSANE but you build up to it)
• Start with $500 as your first goal
• Then $1,000
• Then keep going
• This is your “oh crap” fund for emergencies

Mystery account:

• If it’s a custodial account: honestly just leave it alone until you have a real reason to use it
• If it’s a 529: save it for college (trust me, you’ll need it)
• If you don’t know what it is: definitely don’t touch it until you figure that out