Saving Money - Why and How
If possible, most people seem to try to save a little bit of money each month. This money could come in handy if an unexpected emergency arises or if you decide that you want to buy something that costs a lot of money.
Most people decide to open a savings account (or in the case of DCU and other credit unions – a share account), rather than keeping all of their money in a checking account, because unlike some checking accounts, a savings account allows you to earn extra money on the amount your depositing and saving.
If you open a savings account, your financial institution will pay you a certain percentage of your account balance for keeping your money in that account. This percentage is called an interest rate (at DCU they're called dividend rates). What interest rate is paid varies.
Another thing that is important to know about interest rates is how often it will be compounded. Interest rates can be compounded annually, semi-annually, quarterly, monthly, weekly or even daily. How often your interest is compounded will have an effect on the amount of money you earn as interest.
One of the best ways to watch your savings grow is to put a little aside each week from either your allowance or if you have a job – your paycheck. Two dollars doesn't sound like a lot all by itself, but if you were to save that amount each week for a whole year, you'd end up with over a hundred dollars – not a bad amount to have saved!
An Easy Way to Save: Direct Deposit!
An easy way to save money is to have your paycheck deposited into your savings account by direct deposit. This means that instead of receiving a check, your money is automatically deposited directly into your savings or checking account. Doing this, not only saves you time from having to cash the check, but it can help save you money by not being tempted to spend the cash you're carrying around and it's also a lot safer!
Saving a little bit today can go a long way tomorrow. Learning how to save money is an important preparation for your financial future. While saving money may not seem to be an easy thing to do, establishing short term goals as well as long term ones makes the results seem more achievable.
Establishing a savings routine takes determination and dedication, but may be accomplished in part by changing daily routines. That means think about bringing your lunch to school or work instead of buying it. Believe it or not, saving on the little things can make a BIG difference in how much money you're putting away for a time when you want or need it.