Most of us have to save for the things we really want out of life. Whether it’s a college fund, house down payment, pay-off credit cards, build a nest egg or take a dream vacation, a savings plan can help you reach financial goals faster.
But getting started with a savings plan can be difficult to figure out. Here are 5 easy ways to start saving money plus several high-interest savings, money market and CD accounts that can grow your money faster:
1. Record your expenses
In order to start a savings plan you’ve got to know where your money is going. Make recording your expenses easy. Get a notepad or even an app on your smartphone to record your daily spending. Record every dime you spend for about a month.
That means every coffee, lunch, snack, your mortgage, utilities, magazines or newspaper, lottery tickets, hair product…everything. Know where you're spending money. Once you have the data organize the numbers in categories of groceries, dining out, mortgage, entertainment, etc.
2. Spend Less on small-dollar items
Now that you have a record of your expenses look for ways to spend less. Something that seems minor like a $3 coffee or frappuccino everyday can add up over 30 days – That’s $90. Cutting something small adds up. When you spend less on small-dollar items you increase savings.
Look for non-essentials that you can spend less on – entertainment, eating lunch or dinner out. You will be surprised with how much extra money can be accumulated. Make a little extra dinner to take for lunch the next day, it's that easy.
3. Set savings goals
Setting savings goals makes it much easier to get started. Pick a reason or several reasons you want to save money. And, remember a savings plan can also include something fun where you splurge on yourself. Decide how long it will take to reach each goal. Some goals could be:
- Emergency fund to cover at least 6-12 months in case of job loss or other emergencies.
- Down Payment for a Mortgage or a New Car
- Computer Equipment
- Entertainment System
- Designer Handbag
- Expensive Watch
4. Get a Savings Tip Jar
Tip yourself at home. Stop spending $5.00 bills and instead stash them away in a jar at home. It's like tipping yourself. Sit back and watch those $5.00 bills grow.
5. Save by Automatic Transfers
Once you cut non-essential items from your budget try to save at least 10-15 percent of your net income. It may be less or perhaps more than 10-15 percent, just start where you can but make it automatic. Saving money becomes much easier with automatic transfers. By moving money out of your checking account, you'll be less likely to spend funds that you wanted earmarked for savings.
There are many options for setting up transfers. You choose how often you want to transfer money and which accounts you want the money transferred between. You may even want to open a savings account at a separate bank. Having a savings out of sight of your regular bank may help make it easier to maintain.
Extra Tip – Find High-Interest Savings Account and Move Your Savings Online
Here is an example of FDIC-insured online deposits accounts for short and long-term savings goals with higher than average rates that help grow your money faster.
»High-Interest Savings Accounts. High-interest savings accounts pay a significantly higher rate of interest on deposits while offering the same Federal Deposit Insurance Corporation (FDIC) coverage of $250,000. They'll help you meet your savings goals faster.
CIT Bank Savings Builder Account
CIT Bank Savings Builder Account earns 0.55% Annual Percentage Yield which is over 20x the national average. It requires $100 to open and a $100 monthly deposit or $25,000 opening deposit. There are no monthly service fees. Daily compounding interest.
Aspiration Spend & Save account earns 0.50% APY on balances up to $10,000. This is how it works – when you open an Aspiration Plus account, you get a checking account and a savings account. The savings account earns a 0.50% APY on a balance up to $10,000, while you're enrolled in Aspiration Plus, and have at least $1,000 in monthly debit card purchases. The monthly fee for the Aspiration Plus account is $7.00 or $69 if you pay upfront.
The Chime Savings Account earns 0.50% APY on all balances. However, you’ll need a Chime Spending Account to be eligible for the savings account. Both the Chime Spending Account and Chime Savings Account are free. Plus, applying for will not impact your credit score or ChexSystems record.
CIT Bank Money Market Account
CIT Bank's Money Market Account earns 0.50% APY. It requires $100 to open and there are no monthly service fees. Daily compounding interest.
CIT Bank No-Penalty 11-month CD
CIT Bank's No-Penalty 11-month CD earns 0.30% APY. It requires $1000 to open and there are no monthly service fees. Access funds, if needed with No penalty. Daily compounding interest.
The advantages of online accounts
Online banks can offer a range of higher interest rates and products because they don't rely on brick-and-mortar branches that come with multiple overhead costs. Many online banks charge no monthly service fees, so more money stays in your account. And, of course, your deposits in online banks are FDIC-insured.
With these easy ways to save money, you can reach your goals faster. When considering an online high-interest savings product, make sure to review the following:
- Required Opening Deposit: How much money do you have to deposit to open the account?
- Minimum Balance Required: Do you have to maintain a certain deposit to earn the advertised rate of interest?
- Rate of Interest Paid (APY): How much interest will you earn on your deposits. Is it an “introductory” rate that changes at a certain point or is it the permanent rate? Does the rate apply to existing as well as new customers.
- Compounding Method: How is the interest compounded and calculated on your savings? There are several compounding methods including daily, monthly, quarterly, semiannually and annually.