Your Research Guide to Online Saving Accounts
Saving money always seems to be so hard for me. I do not think I am alone in this. Just from talking to my friends, I know they are in the same place as me. We all have that one friend that has her life together and she saves money with every paycheck. She makes it look like saving money is her job. I believe she is the exception and most of us have trouble saving money.
What You Should Know about Online Savings Accounts
Many of you may not even have a savings account in which to save money. You cannot even begin to save money if you do not have a place to put it. Unless, of course, you are saving money in envelopes at home. Do not laugh, I know people who do it and that system works really well for them. It is probably not the best system for everyone. Since I do not recommend that for you, in this article, I am going to give you some helpful information about online saving accounts. This can be your go to guide for savings.
What Is a Savings Account?
Since I am starting from the perspective that you do not have any type of savings account, especially not online saving accounts, I am going to start with basic information. I believe in having as much knowledge as you can about a subject. This puts you in a position to make sound and educated decisions. A savings account is a place where you stash cash. See what I did there? I tried to make it cute and memorable. Seriously, though, in the simplest terms, a savings account is where you put money that you do not want in the same place as the money you spend regularly.
Your money is in a safe place where not just anyone can touch it. It can also accrue interest. When you put money in a savings account, it is secure. They are federally insured up to $250,000. That means if something crazy happened to the bank, up to $250,000 of your money is protected. This is much better than keeping it in envelopes at home. If you plan to keep a lot of cash on hand in your home, please put it in a fire safe. Money is paper and it burns incredibly fast. You also do not want to leave money around your house. It is too much temptation for anyone in your house.
Putting money in a savings account sets it aside from your spending money. This allows you to sort of forget about it and let it grow. You must continue to add your own money to the account so that you have more money to grow. Here are some of our top savings account choices:
Can I Find a Savings Account Online?
Yes, you absolutely can find online saving accounts. The world is literally at your fingertips. I am not sure if you remember an old commercial for the Yellow Pages. So, I realize that many of you are too young to even know what the Yellow Pages are, but it was a book that had phone numbers in it. Think of it as a huge contact list, just on paper. Anyway, their slogan was "let your fingers do the walking" to explain to people how to look for something in the book. Well, it may be a computer keyboard instead of paper but you can still let your fingers do the walking as you search for savings accounts online.
Just about every bank has a website and offers online banking. If you would like to use online banking, you need to have some other account linked to your savings account. This way you can move money electronically into that account. If the bank you choose has an actual building, typically you can go in to the bank to handle business. However, you should note that some banks offer online banking or in person banking. There are a handful of banks that are encouraging their customers to bank in an online environment and charge you to use a teller. Be sure you know how whichever bank you chose operates so you are not surprised by any fees you may incur.
What Should I Look For In An Online Savings Account?
When looking for online saving accounts, you want to find one that has a high interest. I would recommend you find the one with the highest interest. If the purpose is for you to save money, you want to make sure you find a bank that helps you do that quickly. Banks that offer online services only do not have the additional expense of bank branches typically offer a higher interest rate. You may find online accounts that offer interest rates over 2 percent. Keep in mind the average interest rate for a savings account is about 0.09 percent. Obviously, 2 percent is much higher and it adds up quickly when you do not touch the money in your savings account.
You should also look for an online bank that provides you the best technology. You are planning to use this account online only, so you want a bank that makes that easy for you. You want an online bank that has mobile banking and an easy to use website. Even though you plan to bank online, you should make sure that the bank you choose allows you to access ATMs for free and are reasonably close to you. You also want a bank that does not charge you a ton of fees. You want to grow your money, not pay it out in ridiculous fees.
What Online Banks Should I Consider?
There are many banks across the country that offer online saving accounts. There are even banks outside of the country that may peak your interest. However, there are a handful of banks that stand out above the crowd that you may want to consider when you decide to open an online account.
Top Three Online Banks
The First National Bank of Omaha (FNBO)
It is mostly a midwestern bank, but they have online banking. You can open a savings account online for only $1. It offers 2 percent interest on a savings account. It also offers checking accounts. This bank has its roots in traditional storefront banking. It is working hard to make the switch to a world where many people want to only bank online. It is working hard at providing a world-class online experience for its customers. It belongs to the PopMoney network so you can make money transfers for free.
Synchrony
This bank also offers 2 percent interest on its online savings accounts. Historically, it has had higher than most interest rates on savings accounts. While this bank has a high-interest rate, it does not have a high customer service rate. Its online banking system is not as great as it could be. They only have two branches, but if all you want is a place to put your money so it can grow, this may be the bank for you. There are no service fees and you can open an account with just $1.
CIT Bank
It has a 2.10 percent interest rate, which is the highest we are seeing right now. You need $100 to open an online account with this bank. They do not offer a checking account, so you will need a checking account at a different bank. They may not offer the best online experience for their customers. You have to decide which is more important, 2.10 percent interest, or a great online experience.
What Does It Mean To Manage Money?
Managing money is probably a lot simpler than you realize. I did not say it was easy. I said it was simple. In simple terms, you know how I like to clearly explain, managing money means you have money handling skills. That means that you have a solid idea of how much money you are bringing into your household and how much money you are spending. It does include tracking and budgeting your money, as well as saving and investing. You may be thinking that you can barely pay the bills, how are you going to actually save and invest money? That is a reasonable concern, but one that has a fairly basic answer.
You have to learn how to handle money. Even when you think you do not have any money, you still need to manage it. You need a budget and online saving accounts. You need to have a good understanding about your expenses. This is the place where people trip up the most. They have no idea where they are spending money. Have you every heard someone say, "my paycheck is spent before I ever get it?" That is someone who does not make enough money to pay his bills. You do not want to be in that place. It is a dangerous place and it could easily spiral you quickly into debt. Good financial management means that you are in control of your money and not the other way around.
How Do I Start To Manage My Money?
You need to understand your money to be able to manage it. You need to create a budget. I explain creating budgets in more detail a little further down. A budget helps you become aware of the amount of money you bring home each month and how that is offset by the amount of your expenses. You also need to have a plan to save money. You should find online saving accounts in which to stash some cash. See, I did it again!
Seriously, saving money should be a large part of your money management. You should have money deposited directly into your savings account every payday. That way money is automatically sent to your savings account without you remembering to do it. That money never hits your checking account so you can pretend you do not even have it. You can learn to spend only the money in your checking account. It may be hard at first, but you will get used to it. It becomes easier the longer you do it. Trust me, once you see the money in your savings account grow, you begin to see it is worth whatever sacrifices you need to make.
Rule No.1: Always Pay Your Bills on Time!
This may surprise you slightly but the number one rule to managing your money is to pay your bills on time. I realize that it is not always an easy thing to do. Sometimes there are circumstances outside of our control that we did not plan. In those cases, some things slip and bills are not paid. It may not even be because you do not have the money. You just may be caught up in what is happening in your life that a bill or two slips your mind. It may not even be that complex. Maybe you are paying a bill with a debit or credit card which has expired. You got a new one, but never updated that bill with the new information. Now, that bill has not been paid for a few months.
Unfortunately, life gets in the way, often. You have to find a way to stay on top of your bills so that when life happens, the bills are still being paid. There are so many websites and apps available to you, there is no reason for you not to use on. Unless, of course, you hate technology so much that you refuse to use it. I find it hard to believe that you are in the category of haters. I do not think you would continue reading this article if that was the case. Unless, you just cannot wait to read what I am going to say next.
Why You Should Always Pay Bills on Time?
That truly is the big secret...pay your bills on time. There are so many good reasons why you should. The obvious is your bills get paid. The next obvious is it protects your credit. Another reason is it prevents you from getting collections calls. It makes you feel better to know all of your bills are paid. There is nothing worse than that nagging feeling that you just forget to do something. Do yourself a favor and make sure they are all paid on time.
What Is Considered Wealth?
I always find it interesting to hear what people consider wealth. Many people think wealth means that you are rolling in the money and you do not want for anything. That really is not it. Sure, if you are dripping in diamonds, you have wealth. That, however, is not the only thing that determines wealth. If you have a home, a checking account and online saving accounts, you have wealth. There are many people that do not even have that. If you do not have collections agencies hounding you to pay bills, you have wealth. lf you can pay all your bills on time, you have wealth.
Wealth is not what we typically think it is. Many of us get lost in thinking about what we do not have that we forget to think about what we do have. Now, despite my best effort to explain that wealth is not always having the largest bank account, many people are going to measure their wealth by how many zeros they see in their online saving accounts.
It is always good to want to be more successful and put yourself in a good position financially. There are certainly ways for you to improve your success, but I do not want you to forget that while you may not have the largest bank account, you are still wealthy. You may not have luxury cars and diamonds, but that does not measure the wealth of your life.
Should I Know My Net Worth?
Whenever you are interested in online saving accounts to save money, you should have an idea of where you are starting. When you fully understand your net worth, you can determine your next steps for saving and investing. The easiest way to describe net worth is all of your assets minus all your liabilities. So, it is all of your money and all the items of value minus all money that you owe someone. Add up everything in the assets column. This should include your house, cars, investments and all the money you have in your bank accounts. Once you add up that column, you then subtract all the money that you still owe for all of your items. The number you have left is your net worth.
It should not comes as a surprise to you that people tend to have a higher net worth the older they get. It probably is not a surprise that those with a college degree typically have a higher net worth than those you have a high school diploma. Please keep in mind that your net worth does not indicate who you are as person. All it does it give you a dollar figure of the things you own minus the money you still owe on them.
What Should I Know About Credit Cards?
We cannot possibly talk about saving money with online saving accounts without mentioning credit cards. They are amazing and dangerous all at the same time. When used properly, credit cards can help you by giving you some freedom to buy things you may not have all the money for in this moment. They can also help you build a positive credit history and improve your credit score. When used properly, they can be a beneficial tool. However, there is a major downside to credit cards.
When not used properly, they can easily send you into a terrible financial crisis. I know that sounds like an exaggeration, but really it is not. Credit cards quickly get out of control and they often have high-interest rates. When you only make the minimum payment on a credit card, it never gets you closer to being out of debt. It actually tends to pull you further into the debt cycle. I am willing to bet you know this already.
You may even have some experience with falling deeper into credit card debt. I do not want to spend a ton of time on it. I just want to put this here as a reminder that credit cards are an important part of money management. You must stay in control of them or they become out of control quickly.
Should I Create A Budget?
Yes, you absolutely should create a budget. I know you do not want to think about it. You certainly do not want to spend any time creating a budget. I understand. It can be stressful when you think about money and how you are spending it. It is something you must do. It does not matter what type of financial goals you have. None of them can start without having a budget in place.
Even if your only goal is to find online saving accounts to save money. That is a great goal but it needs to start with a budget. Without a budget, you do not have a clear understanding of how much money you bring in. You also do not have a clear understanding of how much money you are spending. It is incredibly important to understand how much money you are spending. That is in your control.
You may not be able to change how much money you make with each paycheck, but you can control how much you spend. Even when you think you cannot control it, believe me, you can. It may take some hard work and sacrifice, but it is possible to save money. I give you some tips in the next section on how to save money so that you can put more into your online saving accounts.
There are many budgeting apps and websites available to you for free. You should consider one of these to help you create a budget. They are simple and easy to use. They have predefined sections for you to fill in the appropriate information. This makes it easy to see how much money you are spending and in which areas of your life.
How Do I Save Money?
Let us talk about the hard stuff for a moment. What good would a guide on online saving accounts be without some discussion about actually saving money to put in your online saving accounts?
Once you create your budget, you see in black and white how much money you have and how much you spend. If you are like most people, you are spending as much, if not more, money than you make each month. There are some easy and some not so easy ways to cut spending. I will talk about the easy ways first. After you have listed all of your expenses, take a good look at them. Is there anything listed that you do not actually use? How about that gym membership for which you are paying that you have not used in months, possibly years? Cancel it, right now, do not delay. Just cancel it already. Do you have any other subscription services that you are not using? Cancel them also. That is a quick way to save money.
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Now, it gets a little harder
How often do you eat out? I mean all types of eating out, including those coffee runs. Cut down all instances of eating out to only a few times a week. Just by preparing food to take for lunch and drinking coffee at home, you save hundreds of dollars. It may seem like a difficult transition to make, especially if you eat out often, but it really can save you a lot of money. It may also be healthier for you.
Now it gets a really harder
Do you have a habit that may be expensive and you considered quitting several times, but you just have not? It could be smoking or online betting or possibly shoe shopping. Now may be the time to at least limit the amount of time and money you spend on that habit. Maybe if you have the incentive of saving money for a big trip or something you really want, it can help you break that habit.
Conclusion
Obviously, saving money to put in online saving accounts is important. However, it may not be the most important piece to finding a savings account. Always start with your end goal in mind and work from that. If you know why you are saving money, it may make it easier for you to save.