Why Can't I Pay Bills Out of a Savings Account

Dr. X is a running a pretty successfully practice right outside of Boston. After he found out his bookkeeper had been stealing from him, he fired him and decided that paying bills was something he could handle on his own.

He had $60,000 in checks he hadn’t cashed from insurance companies and patients, and took them down to his local bank. He opened up a bank account and proceeded to start the process of paying the bills he had to run his practice. There was rent, for the space, phone service, answering service, several medical supply companies, the payroll company for his staff, malpractice insurance, health insurance, the list went on and on.

It was really frustrating because he didn’t have checks, so he paid many of the bills on-line or over the phone. And after the first month he noticed that the bank charged him a ridiculous amount in fees. “I have no time for this,” he told another doctor in his office. The other doctor had come in for several weeks to assist Dr. X with his work load, and after hearing about his problems she suggested that he call me.

After one visit where he explained the problems he was having, I asked him if I could see his bank statement explaining all the fees. “This is a savings account,” I declared, surprised. “Yes,” Dr. X responded casually. “I wanted to make sure I earned some interest.” “But you can’t pay bills out of a savings account,” I explained, and then went on about how savings accounts don’t provide checks and most banks charge fees if you withdraw money more than a few times a month. By the time I was explaining interest bearing checking accounts to him he was rolling his eyes, “Listen,” Dr. X said, “I have no time for this. I really need to get to surgery. Just tell me what I need to do so this won’t happen again.”

Don’t assume money and an education equals knowledge about the basics of personal finance. Most people aren’t taught this stuff, and our society assumes the knowledge comes automatically.