Set And Reach Financial Goals With A Savings Account
Are you having trouble setting and reaching financial goals
? You know you need to save in advance for Christmas gifts or to build up an emergency fund, but you can't seem to set aside the money in advance in an online savings account.
If you're smart you are using an online savings account rather than a brick and mortar savings account. Why? Online banks have very little overhead and are able to pass on the financial savings to their account holders in the form of higher interest rates. It's a lot easier to have higher interest rates when you don't have to pay rent and electricity for hundreds of branch locations.
At the end of the day setting up a system to regularly save money into any account is a step in the right direction.
Slow and steady - reaching goals in no time
Slow and steady saving wins the financial race. The easiest way to reach financial goals that you have set is to put together a system that will automatically take the money away from your paycheck before you have a chance to spend it.
Thankfully most online savings accounts allow you to set up recurring deposits to transfer funds from another deposit account.
If you have a goal to save $1,000 in six months you can manually move money into your savings account every month. However, the odds of successfully reaching this goal are much higher utilizing an automatic savings plan. For example you can set up your online savings account to withdraw $167 per month or $38.50 every week for 26 weeks.
Earn interest while reaching goals - It pays to save
You could save up for your goal in a checking account if you wanted. However, there are a couple of reasons you probably don't want to do this.
1. Your checking account may not pay interest.
2. If you use your primary checking account to save up for goals there is a good chance that you'll dip into that money for other reasons. When you mix funds in one account you really have to be disciplined to not use saved money for other purposes.
With a savings account you get to earn interest and your saved money is separated from your daily budget money.
Online savings accounts previously offered rates of 4% to 5% on deposits. This was before the economic crisis and the continued lowering of interest rates that have forced banks to slash interest rates. Today interest rates for online accounts hover at around 1%. That is certainly less than in years past, but it beats the national average of 0.20% for brick and mortar banks. Every penny earned in interest is a penny you won't need to save toward your goal.