According to data from the US Bureau of Economic Analysis, quite a large number of Americans are still making use of their personal savings account for the purpose of savings.
So based on the aforementioned, if you can set aside some money solely to save for a rainy day, every month, then you are on the right track of securing your future financially.
Nonetheless, more than half of Americans could not fend for themselves 3 months straight with the emergency savings, while almost 40% couldn’t afford a $400 emergency bill if the need arises.
If you have been saving and yet have little or nothing to show for it, you might be doing something wrong, like saving using the wrong techniques or making wrong investment choices. In this article, we shall be dissecting those actions or inactions that have been stunting the growth of your savings.
Keep your savings and upkeep allowance apart
It has been discovered that many Americans save but in the wrong places. To ensure that your savings remain saved, you have to keep it in a separate account, where you won’t have easy access to it. Also, keep your monthly expenses in a different account to know your spending limit.
Another important thing to note with bank savings accounts is to explore different banks to capitalize on the best interest rates. Note that having separate accounts for different financial expenditures is not out of place, it helps put your finances in perspective.
Lofty expectations from a regular savings account
While it is good to save money using your normal savings account, it may not be an option if you are looking to grow your finances. According to the Federal Deposit Insurance Corporation, the minimum interest rate is 0.06% annual percentage yield (APY).
Discover or American Express, and Alliant Credit Union are good choices to consider if you desire to use a high-yielding savings account.
You need to invest more money
Although there are particular risks involved in investing, an investment account is superior to a savings account, and most of the time the advantage and profit outway the risk, with annual average interest being around 10%.
Lastly, the more you invest, the more your earnings, however, don’t make excuses about not having the bulky money to invest at once. Rather, start with the little you have, grow your investment as you go, and choose the bank that suits your pocket.