Managing your finances effectively starts with saving your money. Opening a savings account is a simple process; however, making your money work for you while it is in there can prove difficult if you have not been exposed to a good strategy to assist you in this area. From finding ways to reduce spending requirements, to eliminating the desire for instant retail gratification, saving money can be an inner psychological battle. Learning to live on a restricted budget will be challenging at first, but you will reap the benefits in the future. Here are some simple tips to on saving money in a bank account.
If you are going to save money, you should have more deposits than withdrawals, this includes in number as well as in amount. So in other words, you should be saving more than you are spending. In order to do this you are going to have to keep track of your outgoings, do this for a month and then organize the results in categories. E.g., groceries, bills etc. You will then need to create a budget so that you can plan your spending.
You should be saving around 10 to 15 percent of your net income. If your expenses won’t allow you to save that amount, you will have to look at ways to reduce your spending. Non essential areas you should cut back on include entertainment and eating out.
There are a range of savings accounts that you can choose from; you will need to decide which is best for you:
- A normal savings account: Is one that you can access easily.
- A high yield savings account: Has a higher interest rate than a regular savings account.
- A money market savings account: Has variable interest rates that may increase as your money grows.
When you get your pay check, your first priority should be a payment to your high interest savings account. An important first step in saving money is having a portion of your pay automatically credited to your savings account. This should be done immediately; waiting typically gives you the opportunity to find other things to spend the money on leaving you with nothing to save.
Saving money is not just about having a fund available in case of an emergency. One day you are going to retire. There are an increasing number of seniors who are unable to retire due to job instability this is a reminder that long term savings goals should be your priority.