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Silly Startup, Savings Accounts are for Rich Kids | 35grove.com | Where Ideas Grow

Silly Startup, Savings Accounts are for Rich Kids


[Photo by isado]

I’ll make this short and sweet. When Gradspot was initially funded, I went to the bank with my co-founder and a big fat check, and with the aid of a banker, we opened up a bank account. Two to be exact. So what’s wrong with that?

They had us open a savings account. A savings account?!?!? But not thinking, we nodded our heads and opened it. Then today, as I was doing my year end financial review, it hit me: the only thing a savings account is good for when it comes to startups is unnecessary fees. There were so many months during which we came dangerously close to dipping below the minimum balance and wasting $15 here and $15 there (thankfully we didn’t).

When we were first offered the savings account we should have taken a step back and thought about it. We’d raise enough money to develop our product, which meant that a lot of the money that was going into it was going to go back out. This is probably the case with most startups (other than those that are funded with millions). As such, with a very volatile balance, the savings account is like a dumbed down version of financial Russian roulette. But who wants to even play a round of dumbed down Russian roulette?

Most importantly, if you’re starting a business, I surely hope you have a better plan for deploying capital than, “earning interest in a savings account.” If that’s the plan, then you need to find a new startup. Otherwise, just open a checking account. It avoids the aggravation of minimum balances and avoids fees. Every dollar counts.

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