Everything Old is New Again - Back to Banking Basics

Remember the old passbook saving accounts? Did you have one as a kid? Remember Christmas Clubs & Vacation Clubs? Did you save most of your paper route, baby sitting, or lawn mowing money in the hope of some day having enough set aside for a baseball glove, new bicycle or even that first car? There was a time when it was very common to put money away every week especially for specific purposes.
Before banks were able to offer the now ubiquitous money market accounts, if you wanted to segregate some of your money into a rainy day fund the only alternative was a passbook savings account. The use of the passbook by banks in America actually dates back to sometime in the early 19th century. It was a small booklet, similar in size and shape to a passport, and contained a running statement of all credits and debits, including deposits, withdrawals, and interest. I can remember when a teller would update the passbook by writing the entries by hand and administering an official bank stamp underneath.
This type of account and record keeping process was well suited for infrequent transactions; and, by providing a hand held record of the account’s activity there was no need for the bank to produce and mail out a monthly account statement. Obviously, transacting business was difficult if the account holder lost the book or simply forgot to bring it with them to the bank. But, fortunately the bank always maintained an official record of the account and, with proper ID would provide a replacement fully updated and ready for more transactions. The old fashioned passbooks became compatible with printers and enabled transactions to be entered “automatically” and eventually passbooks disappeared completely, replaced by more convenient statement savings accounts.
Well it’s amazing how the more things change the more they stay the same. In the midst of the current economic challenges consumers are becoming much more careful with debt and more serious about finding financial alternatives that guarantee a return and also protect against loss of principle. There is a renewed focus on savings, especially as it helps prepare financially for some of life’s more important milestones. In 2009, the passbook component is a thing of the past, replaced by statement savings accounts – now called purpose driven savings accounts – with customized titles such as “Family Vacation” or “Entertainment Center” or any other specific goal. Purpose driven saving essentially creates baskets into which consumers can segregate funds dedicated to a specific goal, dream or objective.
This concept really works. Segregating funds both mentally and physically from the rest of the household budget ensures that every penny in the account goes to its intended purpose rather than for retirement, your kid’s wedding or college tuition, a new car or anything else.
Creating a specialized purpose for which to save helps prioritize the overall budget, creates greater motivation to save, and increases the prospect of actually attaining savings goals. A special benefit not to be overlooked is that savers really enjoy tracking balances online or through monthly statements and actually watching their progress and realizing their dream.
So why not “go back to the future” and start your purpose driven, dream maker savings account right now. That vacation cruise, Harley Motorcycle or in-ground pool will become a reality as you watch the account balance steadily grow and finally accomplish your dreams.
For information on how you can start an FDIC insured savings account with competitive interest earnings and guaranteed principle, contact MileStone Bank by email: support@milestonebank.com or by telephone: 866 - 672 - 2655.