How To Manage A Savings Account

If you're having trouble holding on to a savings plan, this article offers tips to help you keep your savings account in good standing.

You may find it easy to start a savings account. Someone give you $25 for your birthday and you open a special account with the intention of adding regular contributions. But after a couple of months your paycheck gets wiped out by an unexpected car repair. So you skip the savings payment. Another shortage occurs the next month. Soon you're no longer making deposits at all. In fact, you're thinking about withdrawing the small amount that you recently started.

If you're one of the millions of Americans who have no regular savings plan, now is the time to start and stay with one. First, figure out a reasonable plan for depositing a small, regular sum of money each month to an account that you will not use for living expenses. Then keep adding to it. Sounds easier said than done, right? Well, here are a few tips to help you along:

1. Start your savings account with money you can spare. Don't take away from the electric bill or the kids' groceries to put away $100 each month. Open an account with a smaller amount, like $25, that can be squeezed from discretionary spending and won't be mixed. Starbucks won't miss you a few times each month as you funnel that coffee money into your savings account.

2. Look for a high interest bearing account. Some banks offer very low interest rates on savings accounts at present. While that may change, look at all options before choosing a savings plan. Your bank may give you free checking if you open a savings account there too. So instead of interest, you'll save a little on the checking fees; the trade-off might be worth it.

3. Check your monthly statements. Be sure that the correct account number is posted and that you received the right amount of interest. Banks can and do make mistakes, so customers need to review their holdings each month.

4. Keep your eyes open for new options. If another bank sponsors an event that offers a higher yield on savings, take your money to that institution. In addition to banking accounts, consider credit unions and loan companies, though be sure the ones you're interested in are reputable.

5. Move on up. When you've saved a substantial sum, say $1,000 or more, consider moving that account to a money market fund for higher interest. Or you may want to consider an investment account. Check out the risk factors before deciding on the type of investment that might be right for you. Smaller interest typically means greater security, while higher returns may lead to increased risks of losing your savings.

6. Increase your savings deposits. As you earn more money or pay off other obligations, channel those extra dollars to your savings account rather than fritter them away. Watching your savings grow and compound provides a meaningful return on your effort.

7. Don't tap savings for non-emergency items. Unless you plan to use savings for incidental purchases, refrain from withdrawing those funds unless absolutely necessary. Instead, add a discretionary line item to your household budget so you can preserve savings for a longer-term goal.

Managing a savings account need not be difficult. Take a few small steps like those outlined above to protect and nurture your savings, and one day they will take care of you.

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