By Matthew Coan, CEO at Casavvy.com
Whether you are saving for a new car, a wedding, down payment on a house, or another big purchase, you need to come up with a savings plan that is easy to implement in your everyday financial life. Saving can be a mind game, and there are some important factors you need to include to make your savings plan successful and get you your next big purchase for as little of your hard-earned money as possible.
Here are some factors to consider in your savings plan:
Direct deposit is an easy and safe way to obtain your weekly earnings by having them placed directly into the account of your choice where you can then decide what you want to do with it. Setting up direct deposit is as simple as filling out a form with your employer to allow each of your paychecks to be deposited into your personal account. No more worrying about losing or cashing checks, or making trips to the bank every payday.
Online Savings Account
An online savings account is the same as a normal savings account with a few alternative benefits. Online savings accounts are offered by banks that do not have physical local branches that you can visit in person. The lack of physical branches to staff and maintain allows them to save a great deal in overhead, and they pass these savings onto their customers in the form of higher interest rates.
Before you decide whether or not a bank you cannot visit in person is not right for you, think about how you currently do your normal banking. Many people meet their daily banking needs by utilizing their bank’s online account, where you can often deposit checks, transfer funds, check balances, make payments, and so forth. It goes without saying that you can do all of this with your online bank as well. Many online bank accounts are fee free and don’t require minimums, so you can get started anytime. You can also link your online savings account to your physical bank account, allowing for the transfer of money back and forth. This makes your online account just as accessible as your physical bank branch account. And finally, the potential for extra interest gives online savings accounts a distinct advantage.
Combine Your Direct Deposit with an Online Savings Account
When filling out the form at work to set up your direct deposit, you should have the option to distribute your weekly earnings into multiple accounts. You need to determine how your goal fits into your budget. How much can you afford to save each paycheck? This is the amount you’ll have sent to your online savings account each payday. What is remaining you can direct to your normal, everyday spending account.
Combining your direct deposit with an online savings accounts will give you the best and fastest chance for success. This will get you closer to your savings goal by regularly and automatically increasing the value in your account, while also increasing the amount of interest you earn over time. As with all savings accounts, the interest you earn is a percentage of the total value in your account; the more money saved, the more interest you will earn. And it certainly doesn’t hurt that your savings will be just out of reach of easy day-to-day spending.
Reach your Savings Goal
The goal that you are saving for and the amount that you are able to save each paycheck will determine how long it will take to reach your goal. Once you’ve set up your direct deposit to include that online savings account, you will quickly get used to the new amount that comes from your paycheck that is available to spend every week. You may also be surprised how much money you were able to save. Combining your direct deposit with an online savings account is a great way to reach your savings goals and make the purchase you are saving for a lot more attainable in a shorter amount of time.