Online Savings Accounts: How To Kick Your Savings Plan Into High Gear
Opening online savings accounts during these tough economic times might not seem like a practical thing to do
. Many family budgets are stretched to the max with little, if any, money left over after expenses. So how can you possibly save money in this scenario?With some careful planning, you can develop a savings strategy to achieve your financial goals. Online savings accounts can help you save money easier than ever before - and on your own schedule. No driving to the bank. No waiting in line.
The following guidelines will help with the personal savings component of your financial plan. Everyone needs a savings account to access cash when needed. As your life situation changes, you'll likely add more complex investment options to your savings mix.
Take a Hard Look at Your Current Financial Situation
To begin your savings plan, establish your monthly budget and look for ways to cut expenses. Your biggest expense is probably your mortgage or rent. If your housing expense takes up more than 28 percent to 33 percent of your gross monthly income, you should look for ways to cut it - a cheaper house, a roommate, a refinance - whatever will bring this figure more in line with expert recommendations.
After looking at the big stuff in your budget, don't forget the little things. Dollars add up, so making small changes is important. For example, trim your dining out expenses, cut home utility bills - if you look hard enough, you can find areas to save. Finally, keep expense records so you know where your money is going and what you can cut.
Prioritize Your Budget for Saving
You need to make saving for your future a priority. In other words, save for retirement first. For many people, employers withdraw 401K contributions directly from paychecks.
Next, pay your credit cards, then contribute to an emergency fund. Finally, take care of your household expenses. What's left is for discretionary spending. Prioritizing your budget in this manner will make sure you're allocating something to online savings accounts every month.
In terms of percentages, experts advise you devote 10 percent of your income to savings. Other guidelines recommend you save enough to cover expenses over a three to six month period.
Making Saving Easier
After prioritizing saving in your monthly budget, you should set specific goals to measure success. Online savings accounts make it easy to deposit money regularly.
If the recommended 10 percent is too high for your current situation, start smaller and increase the amount as you're able. If your employer offers direct deposit, send regular amounts to your online savings accounts. You can also set-up automatic transfers from one account to another. Even small deposits add up over time, so consistency is the key.
You should also take advantage of your bank's online resources. Tools such as savings calculators and goal trackers help you stay focused. Some financial institutions offer advice web sites complete with articles on how to maximize savings.
Saving money is critical to your happiness as well as your financial well being. Having money when you need it for unexpected expenses provides a sense of peace. And being able to pay for big purchases or vacations just makes life more pleasurable!
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