Money Accounts Spending Types Savings People Eslpod Formal

Banks offer two main types of formal accounts: "checking accounts" that are used for daily expenses, and "savings accounts" that are used to save money for the future. Individuals might "subdivide" (divide into smaller groups) those accounts into informal accounts, such as "emergency savings," or money that they are saving to cover unexpected costs, such as a health emergency or situation where someone loses his or her job. The emergency savings probably aren't in a separate account; the "funds" (money) are most likely in the savings account, but the "accountholder" (the person who owns the account and can access the money) has "mentally" (in his or her mind) "set that money aside" (designated something for a particular purpose).

Many people have "investment accounts" (ways to manage money placed in the stock market). These are often retirement accounts or "college savings accounts," where money is being saved until the future when a child needs it to attend a university. And some investment accounts are simply used to hold money that "wealthy" (rich) people do not have an immediate need for, but can use to make more money.

Finally, a "flexible spending account" is a special type of account that holds money "deducted" (subtracted) from one's paycheck to cover certain types of expenses, such as "daycare" (childcare) and "medical expenses" (the costs of healthcare services and medicines). When people pay for such expenses out of their flexible spending account, they do not have to pay taxes on that money, which can result in significant cost savings.