Financial Literacy for Everyone

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What are you saving for? An annual summer holiday, an education fund for your children or a longer-term goal like retirement? In order to choose how you want to save your money, you will first need to determine your financial goals. The first step is to set a clear savings goal. Having this end goal in sight will help you when it comes to setting aside a specific amount every month or year in order to reach that milestone. Whatever your goal, the amount you set aside to get started does not have to be large. To jump-start your savings, consider automating your accounts to transfer the budgeted amount to your savings each month.

Choosing Savings Options

Check out this Saving for a Goal calculator to get started.

Once you’ve set your financial goals, it’s time to start saving. Choosing the right savings method is dependent on a few factors: how much money you hope to save, how accessible you need the funds to be and when you’ll want to withdraw them. It can be daunting to evaluate the complex options available, but if you learn more about each saving vehicle it will be easier to get started.

Savings Accounts
There are many categories of savings accounts to choose from. You can use one savings account or multiple ones to organize your money for various purposes. Many people don’t limit their savings to just one kind of account, but use different accounts based on when they’ll want to withdraw funds and what they want to use them for. Here are a few different savings accounts to fit particular needs:

  • Basic bank savings accounts offer the lowest interest rates, usually less than 1 percent. They come with few restrictions on access to your money, and they don’t usually have required minimum balances. These accounts associated with brick-and-mortar banks can also be accessed online.
  • Money market accounts are high-yield accounts that pay interest based on the current market rates. They are likely to require a higher minimum balance than a basic bank savings account.
  • Online savings accounts are typically similar to basic bank savings accounts, but they offer higher interest rates because they operate online and don’t involve the overheads that standard banks have.
  • Automatic savings plans are options you can set up for your savings account. You can choose to automatically transfer a set amount from your checking account to your savings account every month.

Certificate of Deposit (CD) (or Fixed or Term Deposits)
If you don’t mind leaving your money alone for a longer period of time, from several months to years, consider taking out a certificate of deposit (CD) – these are also known as fixed or term deposits. These often yield the highest interest of any savings option offered by banks, and have the option to withdraw the funds after the term has elapsed. Unlike with regular bank accounts, if you want to withdraw money before term maturity, you may face a steep penalty. Fortunately, CDs come with no risk and no fees.

To learn more about certificates of deposits and different options available in the market, you can visit comparison websites like this .

Retirement Account Savings
One of the most valuable ways to save is through retirement accounts. Not only are these low risk, they’re crucial to a comfortable retirement. And remember: the earlier you start saving, the more your savings will grow.