Dave Says: Separate Checking and Savings Accounts?

Dear Dave,

I currently have a money market account that I use as my checking and savings account. I get check writing privileges and a debit card with this account, in addition to a better interest rate on my money. Is this a good idea, or is it better to have separate checking and savings accounts?

Brad

Dear Brad,

It doesn’t sound like you have a bad deal there, but it’s always good to have a physical and emotional boundary between your savings and the money in your checking account. This is especially important when you’re talking about an emergency fund.

When everything is all pooled together, it’s easy for the line between savings and checking to become blurred and for you to start dipping into your emergency fund for things that aren’t emergencies – sometimes without even realizing what you’re doing! If this happens, you defeat the purpose of having an emergency fund.

Dave