It has been about a year since I graduated college and started working. So far all my earnings are going into my checking account. Since I don't have much experience with managing my finances, I was wondering is it OK to let all my money go into the checking account ? Or do I have to create a new bank account like a savings account and split the money in between ? As I understand, savings account only yield like an extra $1 every year so is it even worth it ? I am living in USA.
How should I save money? So far all my earnings are going into my checking account.
If you're earning more than you're spending, then you're already saving money!!! :)
I was wondering is it OK to let all my money go into the checking account ?
The term "OK" is very broad. It's a heck of a lot better than spending it all on whatever frivolous thing people of your gender and culture know is "must have" at your age. But it's definitely not the wisest thing you can do with your money...
Or do I have to create a new bank account like a savings account and split the money in between ?
No, but that's a sub-optimal plan.
As I understand, savings account only yield like an extra $1 every year so is it even worth it ?
Most do, but there are many "on-line" banks, which pay a relative much higher (though still low) rate. My savings account is at Ally Bank, but there's also Capital One 360, Synchrony Bank, GS Bank and others. (They're real FDIC-insured banks, which just have a few branches and focus on Internet customers.)
so is it even worth it ?
Even if it paid trivial interest, I'd say that it would be, since it removes the money from your sight, so that you're less tempted to blow it.
Fortunately, because of on-line banks, you'll get higher rates.
You can earn ~1% in a savings account with some banks, and ~2.3% on a CD (5-year). Both will earn you some interest without locking up your money, but CD's typically have a 3-6 months interest penalty if you withdraw early.
Those rates aren't fantastic, but they are better than I get in a checking account. Due to the low return, most people only keep their emergency fund in savings and invest the rest to get better returns.
I have a savings account, checking account, and multiple CD's all with one bank, so you should be able to find one bank that offers most of what you need. If you only had a couple hundred saved, that extra couple bucks might not feel worth having a 2nd account, but it's trivially easy to open multiple accounts and transfer money between them with some banks.