Deposit Accounts: 5 Tips to Build Your Savings

by Amy Lillard

(3/3/2013) Consumers have multiple options for savings accounts today, including basic savings, CDs, money market accounts, and more. But how do you find the money to put in these accounts? How, in today’s spend-heavy culture, can you build up your savings?

Whether the goal is for an emergency fund, for specific items like down payments and vacations, or to fund long-term endeavors like college educations, contributing money to savings accounts regularly is critical. Even those working within a budget or finding themselves living paycheck to paycheck can develop savings over time, and build their savings through the different types of interest available in deposit accounts.

While financial advisors and other experts will offer up a multitude and variety of tips to help consumers save, they can all agree on one — automation. The less you have to think about contributing money to savings, the less opportunity you have to talk yourself out it and spend that money elsewhere. Instead, setting up automatic withdrawals from your checking account or paycheck removes the thinking and the guesswork. Even if it’s only $25 a week, automatically adding money to savings builds your nest egg regularly and easily, and earns interest in the process.

What are other tips to help you add to your savings?

• Set financial goals. Knowing what you’re saving towards can help make it easier to set aside hard-earned money. Additionally, knowing how much you need and when you need it by can help you determine which type of savings account is best. If you’re saving towards a long-term goal of a home down payment, for example, a CD with a longer maturity date and higher rate of return may be a powerful choice. If you’re saving towards a vacation in a few months, a simple savings account may be just what’s needed.

• Don’t touch. Leave the money in your savings unless absolutely necessary, or you’ve achieved your goal. The longer the money stays untouched, the more it earns. If you need help staying away, perhaps a CD with high penalties for early withdrawal is a good incentive.

• Make small moves. Cut back one latte a week, and put the money in a piggy bank. Keep a cup for all the change you accumulate over the week and add it to savings. Even little moves can add up over time.

• Make the tough choices. We’re trained to translate what we “want” into something we “need.” While the newest technology is cool, if you’re trying to save, evaluate whether you really want or need that just-released phone, tablet, or other toy. While discounts and sales may be really good deals, think about whether your really want or need the object in the first place. If you’re disciplined and dedicated to savings, making these choices can help stem the bleeding from your accounts and build funds instead.

For Additional Reading:

The Complete Beginner’s Guide to Saving Money: http://beginnersinvest.about.com/od/savingsanddebtmanagement/tp/saving-money.htm

13 Money Saving Tips for 2013: http://www.usatoday.com/story/money/personalfinance/2012/12/26/saving-money-tips-2013/1791781/