Now that you have found some extra money each month, what should you do with it? Don’t bury it in a coffee can out in the back yard or hide it underneath your mattress; begin searching for banks that will work hard for you.
Start out locally, with a bank that you perhaps already have a relationship with. See what kind of savings accounts they have, and what kind of special bonuses they offer. Sometimes a bank will offer a higher interest rate for an introductory period; sometimes they offer a higher one if you keep a minimum balance. Each bank is different, but the bottom line is always the same; look for the highest percentage rate for your money. The higher the percentage rate the more money you will generate.
How can you make money just by having it sit in a savings account? Well, banks need money for other loans. Basically, banks collect money from customers of various accounts, and they use that money to make loans for other customers. Don’t panic, your money is insured so that if you need it, you can withdraw it without any problems, that’s what the FDIC does. The FDIC insures that you will get your money if your bank goes under. As an incentive for you to give a bank your money, they offer interest rates that pay you a set amount of interest on your money over a specified time limit. Some banks pay by the month, quarter, or year, and your interest rate may fluctuate over that time period or it may stay fixed; this all depends on the policy of your bank.
With all that said, how do you find a bank that will pump up your investment? Start doing your homework. Find out what percentage rates banks in your area are offering. Once you know that number, you can start looking into the finer points; how often does the account accrue that interest? How often does it pay out? Do you need to keep a minimum balance? What happens if you drop below the mandatory minimum balance? All of these questions can be answered by a banker in person or over the telephone. Bank websites are good places to get general information and make your initial inquiries, but when it really comes down the wire, personal service when getting all of the details is of the utmost importance.
Find out how to get the best possible deal from the bank you choose. Some banks offer different types of savings accounts, and your banker can help you choose which one is right for you. Some banks offer high yield savings accounts; these normally pay out a higher percentage rate, but only if you make a substantial initial deposit (sometimes $10,000 or more), keep a high balance over time, don’t withdraw from the account frequently, or give them your other banking business (such as checking accounts or mortgages). Other accounts do not have a required minimum deposit or a required minimum balance, and they may not regulate withdrawals. All of these things need to be taken into consideration when you decide how best to grow your money.
Research, take your time, and choose a bank that will work for you. This is the best way to cultivate your savings.
By: Nicholas Hunt
Archive for category Personal Savings
Do you earn a good income and at the end of the year ask yourself “Where did all my money go?”. I can see you sitting there nodding right now. You can take comfort in knowing that you are not alone as this is a very common puzzle for people. “Where does my money go?
So where does all your money go? Surely you can’t have spent it all …. or have you?
The trick to being successful with your money is to have control over your money. To do this you have to know where it is going. If you don’t keep an eye on it, it will run away and disappear into a black hole. There are holes in your wallets and purses that you probably just can’t image being there. You have to treat each piece of money like a piece of gold that you don’t want to let go of.
Here are some clues for you to consider so you can start to keep an eye on where your money goes
1. Try and identify what portion of your money is going on fixed expenses (such as bills and loan repayments) and what portion of your money is going on lifestyle / discretionary spending (such as groceries, entertainment, eating out, clothes)
Note down the expenses that you have to meet; such as bills, rent, mortgage payment, loan repayments etc Note down the expenses that are nice to have but aren’t absolutely critical. We will call these lifestyle / discretionary expenses (such as groceries, entertainment, eating out, clothes). How much of your money is being spent on lifestyle / discretionary expenses? (Lifestyle / discretionary spending is the area where most of the runaway money escapes from). How do your lifestyle / discretionary expenses compare to the money you are spending on fixed expenses / bills? Look for ways to reduce your lifestyle / discretionary expenses
2. Spend the time doing up a proper budget which will look at your likely future income and expenses
A budget should be a thorough record of all of your expenses across all areas such as fixed bills / commitments and lifestyle / discretionary expenses Ensure your budget is realistic and achievable Limit what you spend on lifestyle / discretionary expenses as this is optional spending and an area that you can get carried away on Allocate money in your budget for all foreseeable expenses and set some money aside for emergencies Don’t forget to provide money for items such as replacement of capital items such as buying whitegoods, repairs / renovations to your home In your budget put a portion of your money aside for savings In your budget include provision for funds to meet any goals If your budget runs into negative / deficit, then you will need to cut down your lifestyle / discretionary expenses or other optional spending until you reach at least a break even point
3. Look at your money habits
Try and identify particular times where you might be a bit frivolous
When you are in a particular mood When you have occasion to celebrate When it is someone’s birthday During particular times of the year Over festive seasons – Xmas / Easter When on holiday / away for weekends Out with certain friends / family members
Think about your pattern of spending
Do you spend first and deal with the consequences later? Do you shop around for a bargain? Do you stop and think / sleep on it overnight before rushing into a purchase? Do you ask for discounts off standard prices
4. Start to keep a record of what you are spending
Carry around a little note book and make a conscious effort to record what you spend cash / money on over a period of time Fill in your notebook on a daily basis updating it as you spend cash / money Review your notebook at the end of the day / week Keep all your receipts and dockets in one central place Use a spreadsheet to track your expenses and bills Track your total expenses over a week, fortnight, month Really keep an eye on your cash as this is what will vanish – you break into a $50 and before you know it you have coins rattling around in your wallet / purse Analyse what you have recorded and try and identify particular patterns / habits Make a particular note of any areas you are overspending Don’t stop doing this until you can say with confidence that you know where your money is going
5. Look for ways to stop the leakage such as
Following your budget Using money jars / envelopes for different expenses such as groceries, eating out, hairdressing, clothes etc Using separate bank accounts for different purposes such as bills, lifestyle, holiday, savings etc Setting up automatic transfers to distribute your pay to separate accounts for different purposes such as bills, lifestyle, holiday, savings etc Giving yourself a set allocation for lifestyle / discretionary expenses each week Being strong and if you spend all your money one week waiting it out until the following week Paying cash for items and not using credit / debt Limiting the purchases on credit cards
6. Remove access to temptations
Take the credit card from the wallet / purse Reduce the limit on the credit card Only keep minimal funds in accounts with debit card access Don’t draw out large amounts of cash and keep it in your purse / wallet Stop access to any savings account via debit cards Remove some accounts from internet banking access Have your savings account with a different bank so you can’t get internet access to it and put the money in your spending account
By: Heather A Wood
Saving Money in 2009
Nov 27
With the Federal Reserve lowering interest rates at the end of 2008, 2009 will be a tough year on people looking to save money. When the Federal Reserve Bank lowers interest rates, it is great for people looking to borrow money. However, these lower rates also translate into lower interest rates for savings account, checking accounts and certificates of deposits.
These lower interest rates are going to make it very difficult for people looking to earn the most interest on their savings. Recently, online banks with high yield savings accounts like ING Direct and Emigrant Direct Bank have already lowered their interest rates. Banks and credit unions around the country have been lower their savings account rates as they can borrow money from the Federal Reserve or other banks for lower interest than they had to pay earlier in 2008.
Lower interest rates are not limited to savings accounts. We are seeing banks lowering their CD rates too.
These lower bank rates are going to make it very difficult for savers to earn money on their savings in 2009. In order for you to earn the most money you can on your savings.
These lower bank interest rates come at a bad time for individuals. Many people are moving money out of the stock market into bank accounts due to the market volatility. Additionally, as unemployment rises and more and more people are being layed off work, people need to save emergency funds more than ever. Typically, people save their emergency funds in high yield savings accounts and certificates of deposits.
You will have to do your research in 2009 to find the best bank interest rates for your savings.
By: Fred Peters