The first thing you’ll want to do regardless of if you already have a savings account or if you are just now starting one is to set a clear and realistic goal. This fits hand in hand with the Savings Pledge that I posted about earlier today, so if you have not already taken the Pledge make sure to do so! It is always nice to not only set a dollar amount goal, but to also understand what tangible goal you are working towards. What do you plan to do with the money when you reach your goal? Are you saving to create an emergency fund, pay of a loan, get a new car, a new addition to the family or something else?
The next thing you’ll want to do is decide where to save your money. The most convenient place to start your search is with your current bank. Most banks list detailed information on their website about what types of savings accounts that they offer and what interest rates they will pay you for keeping your money with them. After you check the rates at your existing financial institution, consider checking on the current rates at other banks and also with credit card companies. I have found that my credit card company offers significantly higher interest rates than my bank. Due to lower overhead costs and the need to have collateral to back-up the amount of credit that is being extended to other customers, online-only savings accounts often are able to offer these higher rates. It is also very important to read through the fine print on the account that you are considering to ensure there are no hidden fees and to make sure that you have a clear understanding of the terms of your interest rate.
Once you have your savings account set-up you’ll be ready to rock and roll with your new savings pledge. This is an important step that should not be underestimated. Savings accounts allow your money to work for you by building interest while you continue to save towards your goal!
Do you have a favorite savings tool or tip on starting a savings account? Please share it with us in the comments section!