Think Beyond Saving Accounts
Every day you work hard for the money you earn so it is only reasonable that the money works hard for you. The question then is what do you do with your hard earned money?
There are three routes you can take with your money, spend, save, or invest. You may think of something else to do with your money but let’s focus on the three mentioned.
Companies know you are earning money and they want in on the action. You are bombarded daily with great deals on household goods, vacations, cars, and latest gadgets among other things. With so many options to spend your money on, you can easily lose sight without a plan. You may end up spending your savings on a vacation or a car that you always wanted. So how do you save?
Everyone has their own way to manage money. Most of us have both chequing and savings accounts. So it may make sense to separate your savings and your day-to-day spending. Whatever you don’t spend you may save by putting it in a savings account. Savings accounts are a simple and easy solution to saving.
Saving accounts may be easy but are they the optimal solution? That totally depends on what are your saving goals. Your savings goals could be saving for emergencies, short-term such as saving to buy a car, or long-term to save for a house. If you are saving for emergencies, a savings account is probably more suitable to have your savings accessible instantly.
If you are saving for a house, for example, a savings account is not likely to be the optimal solution. Savings accounts pay low interest on your savings. With the current interest rates, it is not likely to find savings accounts that pay rates worth mentioning. Your money in a savings account just sits and does nothing much more than that.
Bank savings accounts are not the only option available. There are other financial instruments that can help you get your money working harder for you, such as government bonds, corporate bonds, and certificates of deposit. These instruments can be much more profitable than standard bank savings accounts by offering higher interest rates.
If you are saving for a secure financial future, you have to think beyond savings accounts. Remember, savings accounts are not the only way to save. There are great financial products that can be fit for purpose. Think about why you are saving, how you are going to save, and where do you want to save.