Safely maximize every money
Check to see if the money you’re saving is actually working for you. According to a Mintel poll, over 73% of consumers have a savings account. [2] According to the Federal Deposit Insurance Corporation, the average savings account pays only 0.06 percent annual percentage yield. [3] Even if you have a sizable savings sum, say $10,000, a little APY will not significantly increase it. At 0.05 percent APY, for example, that investment would earn less than $10 after a year.
High-yield savings accounts, which are frequently offered by internet banks, pay more. Because internet banks do not have to pay for physical branches, they can pass the savings on to consumers in the form of higher interest rates. If you deposited the same $10,000 into a high-yield savings account earning 0.40 percent, you’d have more than $40 more after a year.
Along with your initial payment, the extra money will earn interest over time. This compounding interest will increase your balance faster than if you kept the money in a lower-interest savings account.
Remember your goal.
After you’ve saved some money, you might be tempted to tap into it now and then for an unanticipated extravagance. However, if the splurge distracts you from your aim, it is wiser to reject the temptation.
Keeping the goal in mind is one method to avoid a lapse. Are you putting money aside for a vacation? To help you stay on track, keep a snapshot of the location near your computer or in your wallet. Putting money aside for an emergency? Put reminders in your calendar every week to remind you that the fund is available for unexpected significant bills.
You could also discuss your goals with close friends and family so they can join you in celebrating. You are not required to provide specifics. Simply saying, “I set a plan to save money this month, and I did it!” will help you keep accountable and give you a lift.
Increase your level
Once you’ve established a savings plan, look for ways to increase your savings. If you get a raise at work, consider putting the extra money into savings. And once you’ve met your emergency fund goal of saving enough money to cover three to six months of costs, you may move on to other objectives. Read NerdWallet’s advice on how to get started investing to start funding your retirement.
A savings strategy is an excellent first step toward financial security. Put that strategy into effect, and you’ll be well on your way to increasing your money balance.
