For many Americans, savings account equates to a piggy bank. With skyrocketing unemployment and foreclosure, millions of citizens barely have enough money to pay their bills, let alone save for the future. But, the truth of the matter is people need to set aside money for unexpected expenses, investment opportunities, and retirement.
Establishing a savings account can be accomplished from the comfort of home, as many financial institutions offer online banking. However, consumers should take time to conduct research in order to obtain the highest rate of interest and avoid transaction fees
Consumers should seek out high yield savings account providers that compound interest daily, as opposed to quarterly. According to BankRate.com, the average rate of interest hovers around 2.51-percent, but some banks are offering interest rates as high as 6.17-percent. Taking time to compare savings account providers can help consumers earn an additional 3.5-percent or more.
Recently, BankRate published their 2010 high yield checking account report which lists over 200 banks and credit unions across the nation. Annual percentage yields range between .75- and 6.17-percent. Consumers who combine high yield checking and high yield savings can earn interest on funds held in their accounts.
Most people find the only way to save money is to cut back on expenses. This can be a daunting task for those who have more month than money. However, by taking time to thoroughly review personal finance, chances are there are areas where expenses can be reduced.
One money-saving strategy offered by credit counselors is to record all expenses for a month. Impulse buys are one of the biggest budget-busters, but people fail to recognize them because they are only spending a dollar here and two dollars there. Small expenditures are easy to ignore, but can quickly destroy a household budget.
Fortunately, the American mindset is beginning to realize that cheap is chic. One of the best ways to accrue money in a savings account is to turn savings into a game. Some people embark on coupon clipping campaigns to reduce monthly expenses. Others only buy products with manufacturer rebates. Many people are turning to online groups such as FatWallet or Mr. Rebates. Making savings fun usually results in more funds landing in the savings account.
Perhaps the biggest challenge people face is establishing a savings routine. When money is tight it can be difficult to make a deposit into a savings account. But, if you want to save money for a rainy day, it is important to get in the habit of setting aside money for yourself.
Financial expert, Dave Ramsey, promotes debt-free living and recommends depositing a minimum of 10-percent of each paycheck into a high interest savings account. Individuals unable to set aside 10-percent should strive to deposit as much as possible and work toward the goal of saving 10-percent of their income. Saving a little money is better than not saving at all.
Not having a financial safety net in place causes anxiety and stress when emergency situations arise. People who don't save lose out on investment opportunities which could allow them to double or triple their savings. People who want to buy a house will find they can't afford the down payment because they didn't plan for the future.
Saving as little as $20 per week can grow to several thousand dollars over the course of time. Those who don't save now will find it much harder to get ahead in the future. Now is the time to take control of finances. Establishing a savings account can help your money grow and provide funds when you most need them.
Multiple savings account options exist. Take time to research which type of savings account is best suited for your needs by visiting BankRate.com. Additionally, our personal finance and savings account article library provides information and resources to help you make informed choices. New money-saving articles are published weekly, so take a moment to subscribe to our mailing list and receive instant notification when new information is published.
Published on June 16, 2010 at 02:10 AM