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.
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.
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:
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.