As teenagers or young adults we can have a variety of goals for which we want to save. Saving for college, saving for our first car, saving for a home, or saving for our retirement are all common savings goals that require regular savings contributions over a long period of time. Before we start to invest for our goal we should shop around to find the Best Savings Account with the Best Savings Rates.
The easiest way to save money is to set up an Automatic Savings Plan to transfer a fixed amount of money from our Checking Account to our Savings Account on a weekly, biweekly, or monthly basis.
Who Needs an Automatic Savings Plan?
Everyone needs a Savings Account with an Automatic Savings Plan; and I mean everyone, from a year old to 81 years old. Savings Accounts are bank accounts that offer higher interest rates than Checking Accounts.
Our parents can start to invest for our education in a 529 account at a young age to help us pay for our post secondary education. All states offer a 529 account, although the tax benefits and incentives can vary per state. A small amount of savings for our education in a 529 account over 18 or 19 years can be a big help in college to pay for tuition, books, and housing.
Even if we don’t have a specific goal we should still save on a regular basis through an Automatic Savings Plan. This will allow us to build up an emergency fund as well as develop good savings habits.
I opened a joint Savings Account with my Dad 4 years ago. My Dad and I both contribute the same fixed amount of money into our joint savings account each month, then we use the money together for common goals such as going on a family vacation.
Anyone who is saving for a specific goal, carries an unused balance in their checking account, or needs the convenience of earning higher interest rates while having access to their money needs a Savings Account with an Automatic Savings Plan.
What Are The Best Savings Account Rates?
Many financial institutions now offer High Interest Savings Accounts which offer a superior interest rate to regular checking and savings accounts. High Interest Savings Accounts are “virtual” accounts that offer unlimited free self serve transactions online, over the telephone, and at ABMs.
ING Direct is currently offering 1% on their Savings Account.
Ally is currently offering 1.04% on their High Yield Savings Account.
When Should I Start an Automatic Savings Plan?
We should start saving money on a regular basis through an Automatic Savings Plan as soon as possible. Saving even as little as $25 per month can add up to a big amount of money over time.
The benefit of an Automatic Savings Plan is that the money is automatically transferred. We don’t see it and therefore we don’t miss it. I set up an Automatic Savings Plan to transfer $100 into my High Interest Savings Account on a biweekly basis. Every pay day I wake up and my money is already transferred from my checking to my savings account. I like watching my savings grow through my Automatic Savings Plan.
We can set up an Automatic Savings Plan at our local financial institution, online, or by telephone. The amount that each person can afford to save depends on our income. Automatic Savings Plan contributions should be included in our monthly budget, this ensures that we continue saving regularly over time.
Why Do I Need the Best Savings Account?
Although the interest on Savings Accounts may not seem like a lot; if we start to invest regularly through an Automatic Savings Plan at a young age our savings can add up over time. A little bit of interest is better than no interest at all. This is the beauty and benefit of the compound interest effect.
Other Posts in our Fun Financial Tools for Twenty-Somethings series:
Learning About Lines of Credit and The Revolving Credit Door
Account Balance Are Just a Click Away with Online Banking
The Advantages and Benefits of Online Shopping