Life is unpredictable and at times out of your control. However, you are in charge of your savings. You choose the amount of money you put away, where you save it and how you save. You shouldn’t only worry about how to maximize your savings when you are ready to retire, it is a responsibility that begins in your early 20’s.
Putting even a small amount into savings will help because of interest. Interest paid at 5% on a $3000 dollar investment into savings would add an extra $150 to your money. If you keep going with 5% interest being added to the new balance, you will end up with $4886.68, without ever depositing more of your own cash. It would be beneficial if you could put something in on an annual basis to will maximize your savings.
One of the important things to do is open a savings account, by keeping your money in a checking account, you are not making any interest! Also to continue maximizing your savings, is to shop around for banks who might be offering better interests rates.
Simply opening a savings account and depositing your money is an easy way to maximize your savings because savings accounts earn you cash. Read on to discover four ways to maximize your savings, and give yourself a better financial future.
1. Create an Online Savings Account:
- online banks usually have higher interest rates for your savings.
- provides better annual percentage Yield. (annual rate of return considering compound interest)
- no minimum amount required in your savings account.
Be aware of:
- advertised rates ( Do they get lower?)
- what are the transfer limits on you online savings account?
Don’t be afraid of online banking. Many people use online services. It might be odd at first but you will eventually be comfortable.
2. Utilize a Money Market Account
- typically needs a minimum balance
- balances are usually required to be higher, but this also makes for better rates to maximize your savings.
- typically no monthly fees because of the minimum balance requirements
- funds usually can be accessed through transfers, or checks.
- limit on the number of transactions you are allowed to perform each month. There are only 6 transactions per month allowed.
For those who are just experiencing online saving, want to maximize your savings, and still want to be able to access your funds the money market account is a good choice.
3. Certificate of Deposit Investment.
- To earn the maximum interest you can certificate of deposit investment is the way to go.
- Certificate Deposits essentially are savings accounts that pay interest on deposits.
- offered in terms of as little as a few months up to five years.
- low-risk investments, and easily accessible at numerous banks in the U.S
- the longer you leave your money invested, the better the return will be.
Cautions of Using Certificates of Deposit to Maximize Your Savings
- penalty fees if you need to take money out
- those in their 20’s and 30’s should use caution because it is more likely you will need to access funds
Be sure to look for the best rates using the CD Rates Table.
4. Offered Incentives from Banks
- banks use many different types of rewards or incentives to entice customers
- some offers include demographic specials, savings accounts combined with rewards, and promotional deals
- accounts that offer rewards, such as checking or savings accounts, usually have requirements on a monthly basis that customers must meet (amount of transactions, signing up for direct deposits)
- When requirements are met, these reward typically come with higher interest rates.
- To really maximize your savings be sure to check rates because it will not be worth it if you only have a small sum of money to put in, and of course the best rate is how you maximize your savings!
If you are looking to begin saving or maximize your savings that you already have, the first thing to do is compare rates and offers. Be on the lookout for introductory yields offered in the short term but be careful to read all the information and make sure you are satisfied with the rates that will resume after the initial bonus offer.
Other factors to consider are your age or position of employment, such as if you are in the military. For military service the Defense Department offers a savings deposit plan. For those who under the legal age of 21 look around for accounts that are specifically designed for your age category.
Whatever route you decide to use in order to maximize your savings make sure you keep yourself controlled, in order to not be withdrawing more money than what you are you putting in. Keeping your long term goals will be helpful in maintaining success at saving. Saving money is hard but it will pay off.