The following is a guest post. To learn more about guest posting on iHeartBudgets, please contact me.
If you have a savings account and you regularly pay money into it, then you are doing a very good job of preparing for the future. You are putting some money aside to save for a big purchase or an event (i.e. a car, a house or a wedding) or you are saving some money just in case.
Whatever your reason for saving money, you need to ensure that you are getting the best possible return on your savings. Many people simply open a savings account and stick with the same one for years, even when there are better interest rates available elsewhere.
You need to assess the effectiveness of your current savings account. If it isn’t working for you anymore, it’s time to switch to another type of account, one which has a better interest rate and will make your money go further.
Here’s what you need to do:
- Find out the interest rate on your current savings account.
- Use your bank statements or a savings calculator to work out how much interest a year your money is accruing.
- Compare savings accounts from other providers, looking at the interest rates and other terms.
- Find an account that suits you and make the switch.
- You should also take a look a fixed rate savings accounts, such as CD’s and ISA’s (UK only). These usually offer better interest rates than traditional savings accounts, and can put your money to work for you.
iHB Thoughts: Saving is a very important topic here at iHeartBudgets. It’s simple, really. First, you need to make a goal to save some money and ACTUALLY DO IT, otherwise you don’t even get the luxury of finding the best interest rate, BECAUSE YOU HAVEN’T SAVED ANY MONEY! Once you get in the habit of tucking away a little cash every paycheck, you want to make sure you pick the best savings account for your money. Just follow the steps above to ensure you aren’t earning .000001% interest while the bank is laughing all the way to the….uhhh…bank. I say you should put your money to work, not just let it lounge around in a low-interest account, drinking martini’s and asking you to foot the bill.
Comments: Do you have a savings plan in your budget? Wait, do you even have a budget? Have you assessed how effective your savings account is and maximized your interest rate of return to make sure your money isn’t being lazy?