When most people are fairly young, their parents will open a savings account for them to put their money in. Their parents will teach them the basics of putting money in the account and keeping it there so that it can earn interest. By the time these children become adults, the teachings of their parents are usually gone. Most people these days find it very difficult to put money into a savings account and actually keep it there. Honestly, it is getting harder and harder to do it, but that doesn’t mean it can’t be done.
1. The majority of individuals with savings accounts have them with a physical bank, which means they probably have an ATM card and they can access their money quickly – if they need to. Sadly, this is exactly what allows people to let money flow out of their account instead of into it. Since the money is so easy to access, most people think of their savings account as a place to go to for extra money, which is usually spent on frivolous items.
In order to avoid this, a person should open an online-only savings account. Many banks offer this type of account and some offer it exclusively. A person cannot withdraw their funds through an ATM because there is no card for it. Also, the money must be transferred to a checking account in order to access it, which can take a few days. Therefore, the money in an online-only savings account is much more difficult to access, so many people would think twice before pulling money from their account.
On a side note, online bank account providers usually give a higher annual interest rate. American Express currently offers a 1.30% interest rate and other online savings accounts offer interest rates above 1.00%, which is higher than almost every physical savings account provider.
2. The most efficient way to put money into a savings account is to place a set amount into it every two weeks or every month. For most people, this amount won’t be incredibly high, but putting a few dollars into the account on a regular basis will help the account grow fairly quickly. A good target amount to place in your savings account each year is $500 – $1,000. Of course, depositing even more into the account is better, but many people will find it hard to do so.
If you put $1,000 a year into your savings and don’t remove any of the money, then you would have $30,000 after 30 years, which is a pretty nice sum of money. It’s important that you never take money out of your savings account. Even if it’s an emergency, you should attempt to take care of it through other means. Then again, if you absolutely have no other method of solving the emergency, then the savings account money is the best solution. It all just depends.
3. There are plenty of ways to keep money in your account. First of all, you should completely forget that the account can be withdrawn from because it’ll save you a lot of temptation in the future. You shouldn’t think of your savings account as another source of money. Obviously, many people use their savings as a source of emergency money, but you should minimize your reliance on it as such an emergency fund. Savings should not be spent – it’s that simple.
If you do end up spending from your savings account, you should replenish the money quickly, plus a little extra money to make up for the withdrawal. Likewise, setting up a penalty system for yourself when you do withdraw funds is a good idea. An example of this could be not dining out for a week or two if you use your savings to purchase something.
In these times, it is pretty difficult to put money into a savings account and keep it there for any extended amount of time. It is possible, however, and everyone should be able to put at least a small amount of money into their savings each year. The more money in the account and the longer it stays there translates into more interest earned, which is good for everyone.