Having a savings account can provide peace of mind knowing that funds are available when unexpected expenses arise. Financial experts such as Suze Orman and Dave Ramsey recommend saving a minimum of 10-percent of income, but many people fail to save because they feel they can’t afford it.
For many people, the only savings account they have is a piggy bank. As unemployment rates continue to rise, millions of Americans are scrapping by and can barely afford to pay their bills, let alone set aside money for the future. But, unless income falls below poverty level, chances are you have more money than you think.
In order to establish a savings plan it is important to thoroughly review expenses. Many people live paycheck to paycheck and rely on credit cards to get them through each month. However, creating a household budget can shed light on areas where expenses can be reduced or eliminated.
Some people view budgeting as a chore, but taking time to explore personal finances can be enlightening and rewarding. Learning how to be frugal can offer financial freedom. Plenty of personal finance websites offer strategies for saving money to achieve short- and long-term goals. One of the most trusted budget-planning websites is Mint.com.
Most savings account providers offer online banking which allows consumers to open and manage transactions from the comfort of home. In order to obtain the best interest rate, consumers should spend time comparing financial institutions.
BankRate.com provides a list of nationwide financial institutions which allows consumers to compare opening deposit requirements, transaction and account management fees, and interest rates.
Consumers should look for high yield savings providers that compound interest daily. According to BankRate, the average interest rate hovers around 2.5 percent, but some financial institutions offer interest rates as high as 6.2-percent. Taking time to comparison shop can help consumers earn an additional 3-percent or more.
The key to consistently contributing to a savings account is to treat savings as a bill. Most people pay their bills each month and use the rest of their money for groceries, clothing, transportation and entertainment. With a little tenacity, consumers can reduce personal expenses and contribute funds to a savings account.
If you aren’t able to contribute 10-percent of income toward savings, strive to save $5 or $10 per week. Saving a little money is better than not saving at all. As your savings account grows, chances are you will find ways to contribute more. If possible, set up an automatic transfer through your checking account.
Not having a financial safety net can lead to anxiety and stress when emergency situations arise. People who don’t set aside money miss out on investment opportunities that could allow them to double or triple their money. People who want to buy a house will not have the necessary down payment because they failed to plan for the future.
Saving as little as twenty dollars per month can turn into thousands of dollars over the course of time. Individuals who do not save now will find it considerably more challenging to get ahead in the future. Now is the time to take control of personal finances. Opening a savings account can help your money grow and provide funds when you most need them.