Opening a Savings Account: One Simple Tool to Revolutionize Your Finances

Whether you’re already planning for next year’s vacation, or you just realized that you’re a few years behind on your retirement goals, a savings account can put you on the right path. Though you can keep your money set aside in a checking account, it will simply sit there when it could be working for you. Savings accounts offer a better solution, allowing you to keep a steady fund available that earns interest over time. Not all accounts are created equally, so it’s important to look around for one that offers you flexible benefits and a high interest rate. However, there are a few benefits you’ll enjoy from most accounts.

Enjoy Peace of Mind as You Plan for the Future
Saving money can be an intimidating prospect, especially if you're saving for a large goal like a retirement fund or a college education. That’s why it’s so important to take that first step. When you open a savings account, you’ll begin to experience greater peace of mind knowing that you’re planning for your future responsibly. Begin with a specific savings goal and track your progress along the way. As you learn more about saving, you can try out different investment vehicles and figure out which plans offer the best rates.

Earn More from Your Savings
There’s no reason to let your money gather dust in a standard checking account when savings accounts are so easy to open. Many accounts have low minimum required deposits, so you can begin earning interest on your savings right away. Though some other types of investments will yield higher interest rates, savings accounts are low-risk. Your initial investment and the interest you earn are always protected, so you don’t have to worry about losing everything in today’s unstable economy. To find the best interest rates, look for online savings accounts. Online banks generally offer higher rates than traditional banks, which makes it easy for you to earn even more on your investment.

Automatically Connect Your Accounts and Transfer Funds
In many cases, you can also link an online savings account to your other accounts and transfer funds between accounts. Linked accounts have several key benefits. First, you’ll have an easier time saving when you can set up your account so that it automatically transfers funds. You can also manage your accounts easily from one place, which keeps you informed and gives you a better idea of your total financial picture. Finally, you can access your account whenever you need to. Many banks offer mobile applications that even allow you to check in from your phone.

Get Better at Budgeting
By encouraging you to set aside a set amount each month, a new savings account can also help you get better at budgeting. Before you start investing, create a comprehensive monthly budget that takes into account your necessary expenses, discretionary spending and savings. If you’re worried about sticking to your savings plan, you can set up automatic transfers within your account so that money from your paycheck will be deposited directly into your savings. When the money is already removed from your checking account, you won’t miss it as much as you otherwise might.

Keep Track of Your Savings Goals
As you save, make incremental goals that progress toward your larger goal. For example, if you’re trying to save 1,000 dollars, create five short goals for yourself of 200 dollars each. This minimizes the larger task, and makes it seem as though it is closer within your reach. As you hit each milestone, you’ll experience a feeling of accomplishment that will encourage you to keep savings account.



Victoria Lee is an experienced author with a special interest in finance. Based in New York, she gives advice on investing your money and the benefits of a savings account. Her favorite pastime is reading up on the latest finance news and she saves her best tips for her finance information pages: http://www.squidoo.com/lensmasters/FinancialTips4U at Squidoo.