Tips for Saving Money
Saving money is one of those things that is much easier said than done.
Most of us know the importance of saving money, but truly feel we can do better at it. And, many of us don’t save at all…even though we know we should.
There is more to saving than spending less money, even though that can be the most challenging aspect of saving money. The following are critical questions you must ask yourself when you desire to save money:
• How much money should I save?
• Where will I put my money?
• How can I make sure my money stays where I put it?
Many financial experts suggest you should save 10 percent of your gross income each month. The best way to do this is by paying yourself first before you pay any other bills. For example, if you earn $1,000 per month, be sure to pay yourself at least $100 each month. In many instances, individuals will have this money automatically debited from their paycheck, so they never see or “touch” the money before it is deposited into their checking and/or savings account. Furthermore, the temptation to put in less money is taken away when you don’t see it to begin with. At Bank of Colorado, we can work with you to automatically deposit your money into a savings account. Click here to learn more about the variety of savings products available to you.
Saving and Interest
When it comes to savings, though, interest is what it’s all about. Interest is what is charged or paid for the use of a person’s money. For example, a financial institution pays you a certain amount of interest for funds deposited into an account; it then provides loans and other investments using that money.
The amount of interest you receive on any deposit depends on the rate and annual percentage yield (APY) paid on that account. As the name suggests, an APY is the yield you earn on a deposit over a year. It refers to your earnings – how much money you’re making. It is important, therefore, to not only look at the interest rate, but at the APY as well. In most instances, the longer you keep your money in a certain savings or investment account, the higher the rate and APY.
Where Will You Put Your Money?
Some accounts will have a higher rate and APY than others. You should look for your ability to access the account, the requirements for keeping money in the account, and whether or not it is federally insured. All of these variables are taken into account when determining a rate or yield on an account. Furthermore, your funds deposited at Bank of Colorado are federally insured by the Federal Deposit Insurance Corporation (FDIC).
There are many different types of savings products available at Bank of Colorado. Click here to learn more about the variety of savings products available to you.
How Can You Make Sure Your Money Stays Where You Put It?
There are two key things you can do to make sure your money grows. First of all, you need to set savings goals. Whether for short-term or long-term savings, you have options available to you in the market. If you want to buy a car, that may be a shorter-term goal and you can utilize shorter-term savings options, such as a money market or certificate of deposit as savings options. For retirement, you may need to look into IRAs or other types of investment vehicles for assistance.
Second, you must establish a reasonable budget. A great way to keep your money earning dividends/interest for you is to keep from withdrawing it for expenses and other purchases. Once you establish your goals, you are then ready to create a budget for your household. Your budget is your lifeline to achieving your savings goals. To create a functional and reasonable budget, you may need to trim your expenses, stop using credit for all your purchases, and/or keep a record of your monthly goal achievement.
Saving money is a critical part of any household. By following these guidelines, you will be able to achieve the success you desire in your financial future. If you would like to speak with one of our representatives, call or stop by one of our 47 branch offices, or click here to learn more about what we offer at Bank of Colorado.