Maximize your savings with a high-yield account: American Express® High Yield Savings
- Monthly fees: $0
- Interest compounded daily
- Minimum deposit to open: $0
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Saving money gives you a financial safety net and helps you secure your future. Use these six tips to maximize your savings rate, so you have even more money to put toward your dreams and goals each month.
You won’t know how much you can save until you track your income and expenses. There are several budgeting apps that will do this for you. But if you’d rather do it the old fashioned way, here’s how:
If you have money left over, congratulations! You have funds to save each month. If you’re in the red, this means you’re overspending and need to either increase your income or cut down on expenses until you have some wiggle room to work with.
Now that you have a clear idea of your income and expenses, you can create a plan for how much you want to save each month. Take some time to think about your savings goals. Do you have any particular purchases in mind, or do you simply want to build your balance as much as possible? An effective savings plan outlines:
For example, if your goal is to build up a $1,000 emergency fund in four months, then you’ll need to save $200 a month to reach it.
If you have debt, it may be eating up a huge chunk of your income — which means you have less to save each month. Prioritize paying off any unsecured debt, such as credit cards, student loans, medical bills and personal loans. These types of debt usually have high interest rates that make it difficult to get ahead and save.
Most people use the debt avalanche or snowball method to pay off debt. We recommend choosing a strategy that works best for you.
The best way to maximize your savings is to set aside money on a regular basis. There are several different ways to automate your savings, including setting up recurring transfers or using money savings apps. When you automate your savings, the money is out of sight, out of mind, so you’re not tempted to spend it on other things.
You can also have windfalls, such as a tax refund or a bonus from your employer, automatically sent to savings. The more money in your account, the more interest you’ll earn.
An important part of any savings plan is working out where you can cut back on expenses. From gym memberships to eating out, there are plenty of ways you can reduce your spending and have more money left over to put toward your savings.
One of the biggest barriers to saving is the temptation to dip into your balance at any given time. If you’re the type of person who always dips into your savings, you may want to consider taking steps to make it harder to do so. For example, you could open a savings account with a different bank, so it takes longer to access your money.
If you want your money to work harder for you, it’s essential that you choose the best account for the job. There are several different accounts you could open:
If you have multiple savings goals, you may even want to consider opening a couple of accounts. For example, you can open a savings or money market account for upcoming vacations and a CD for a down payment on a car you plan to buy next year.
Use the table to compare your savings options. If more than one account catches your eye, click the “Compare” box to view them side-by-side.
Maximizing your savings rate takes time and dedication, but it leads to financial security if you stick with it. Follow these tips to boost your savings rate and accomplish your goals.
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