Is there a way to save money without feeling like your bank account is so tight that you cannot do anything? When you try to save money it can make it hard to get by each month with so many expenses and other things that can come in. The real secret to saving money is that it takes dedication and hard work. If you have a plan set in place you will be able to save effectively without feeling like things are so tight that you cannot do anything. Here are some steps that you can follow in order to start saving your money.
Step # 1: Select the Right Savings Account
Open the right account. When you are trying to save your money you need to focus on opening the right type of savings account. The savings accounts that banks will give to you often have low interest rates. You can earn a higher interest rate when you open an online savings account. Use a CD rate chart like this one to compare interest rates on savings accounts. We recommend using CD accounts, especially if you are retired as it provides you with an effective way to continue making money. CD laddering is an effective way to build money continually through high interest rates. The longer you invest your money into a CD account, the more you will make!
Step # 2: Create a Budget
To know how much you can save you have to know how much money you have left over after your expense. It is a good idea to focus your efforts on looking at where you can place extra money toward savings. Start cutting out the expenses that you do not need like the costs of your entertainment expenses. When you do this it will be able to help you reduce the expenses so you can place more money toward your savings. Try to place as much as you can to your savings to actually grow your account.
Step # 3: Automate Your Savings
If you automate your savings plan from your paycheck, it is much easier to save the money. Talk to your employer to find out if they provide automatic savings plans. Start with a small amount and then move up to the point that you are saving at least 10% of your income or more in the savings account. One way to start this process is by starting to save $5 to $10 of every $100 you make. The more you practice saving, the easier it is to make savings into a habit.
Step # 4: Control Your Spending
Stop spending more than you make. Far too many people spend before they save, which leads to a major headache if you aren’t careful. The problem with spending too much is it quickly leads to credit card debt and other problems as you end up borrowing money from lenders to pay for your spending habits.
Step # 5: Compare Savings Rates
Keep your eye on savings rates to find out if your bank is giving you the top online savings rates. We do see a number of traditional banks with lower interest rates compared to online banks. Online banks provide higher interest rates as they do not have as many branch locations, or do not have branches at all. The lower overhead expenses allow the bank to provide you with higher interest rates. Use the CD rate comparison chart to learn about the best online bank rates.
For more information about CD accounts and tips to save money, stay tuned to our next blog entry!