Deposit Account or Checking Account Which Should I Open?
A deposit account or checking account, which to open? Both is the answer, the checking account is a transactional account which you can pay your bills from and the deposit account would be your savings account. The savings account could be a savings account or a certifiate of deposit. With current savings account rates and CD rates so low right now it doesn’t make a difference as far as the interest the account will earn but use a CD calculator to figure out how much interest your accounts will earn. Though since the best CD rates are low you will be depressed when you see that you won’t earn that much money on an interest bearing account.
With the checking account avoid “overdrawing your account,” which can happen if you write a check or otherwise attempt to withdraw (by mistake) more money than you have in your account. Besides trying to pay for daily living expenses, you may need to buy a car, pay off debts, save for your children’s education, take a vacation, or buy a home.You may want to have family members come up with ideas.It’s a way to monitor your financial health.
How do you manage all these financial challenges and at the same time try to “buy” a secure retirement?Shop around for a good deal, preferably an account without a monthly maintenance fee and that earns a decent interest rate. Yes checking account rates are lower than bank CD rates.You may have other financial resources that aren’t included in your net worth but that can help you through tough times.
Pay attention to your bank statements.These transactions can be costly.It also is possible to overdraw your account using your debit card at the ATM or when making a purchase.A strong net worth also will help you through financial crises.Keep your checkbook up to date by recording all transactions, including ATM withdrawals, bank fees, purchases you make using a debit card, and any other deductions that do not involve writing a check.
Look at your statement as soon as possible after it arrives in the mail or monitor your account more regularly on the Internet or through your bank’s telephone banking service.Write on each card what you need to do to accomplish that goal:
When do you want to accomplish it, what will it cost (we’ll tell you more about that later), what money have you set aside already, and how much more money will you need to save each month to reach the goal Your aim is to create a positive net worth, and you want it to grow each year.
Immediately report any errors or unauthorized transactions (to protect yourself from accusations that you were negligent in managing your account).Online banking also allows you to monitor your account without having to wait for a statement in the mail.
You may be going through a major event in your life such as starting a new job, getting married or divorced, raising children, or coping with a death in the family.Some goals you may be able to borrow for, such as college, but you can’t borrow for retirement.Make retirement a priority!
And remember that what’s good for your parents or your friends may not be best for you.Yet like many people you may wonder how you can achieve that dream when so many other financial issues have priority.Your net worth is part of what you will draw on to pay for financial goals and your retirement.
Review your net worth annually.Sort the cards into two stacks: goals you want to accomplish within the next 5 years or less, and goals Sort the cards within each stack in order of priority.See If at First You Don’t Succeed) Consider Internet (online) banking.
Don’t leave something out at this stage because you don’t think you can afford it.It starts with a dream, the dream of a secure retirement.How do you turn your dreams into reality?Identify other financial resources.Start by writing down each of your goals on a 3″x 5″ card so you can organize them easily.Recalculate your net worth once a year.
You may have aging parents to support.This is your “wish list.Also promptly compare your checkbook with your monthly statement or review your account information online or by telephone.Banks usually offer several accounts to choose from with different features, fees, interest rates, opening balance requirements and so on.
This saves on the costs of postage and buying paper checks.This service allows you to make payments or move money from one account to another through your bank’s Web site instead of (or in addition to) writing and mailing paper checks.This needs to be among your goals regardless of your age.
Saving Money and Cutting the Fat
Saving money consistently and being disciplined about it isn’t easy.You probably have credit cards that you’d like to pay down first but you should pay down the cards and save at the same time.
The first step is to pay yourself first, set aside about 5 to 10 percent of your income. If you have direct deposit with your employer you can setup a savings account and place the 5 to 10 percent into a savings account via direct deposit. Interest rates are low so the best CD rates today are very low, don’t expect much higher CD rates until the end of 2014.
Once you have about $1,000 move the money into a long term certificate of deposit account so you won’t be tempted to spend the money. 5 year CD rates are around 2.50% right now so you’re savings will also earn interest. The same holds true for current savings account rates which are also near 2.50%.
Next sit down and create monthly expense list of everything you spend money on to find out where your money is going and where you might be cut the fat.
Of course cutting big expense items will be good but all the little items you spend money on add up in a big way, so if you can cut those expense items you’ll be surprised at how much you can save.
You can’t cut your needs but cut your wants, at least most of them. speaking of small items to you eat lunch out everyday at work or by that $3 latte at Starbucks? That can ad up to $150 to $200 a month, that can be a good starting place to cut out the fat.
Saving money every single day will also add up, don’t use your change, throw it into a jar and every month count it up and place it in a savings account. Don’t use those coin machines at the grocery store, they take about 5% of your money.
Another place you can find money is by using coupons. The money you save using coupons put into a jar along with the change and put it into a savings account each month.
You Don’t Know This Millionaire
You don’t know me but I’m a millionaire. I’m in my mid 40′s and never made more than $75,000 a year. I have a family, three children a wife who stays at home but has a harder job than I do and still been able to save a million dollars even with savings rates monitorbankrates.com/online-savings-accounts on online savings trates and CD ratesvery low these days.
How did I do it? I didn’t sell a company, make money in the stock market all I did was saving and invest my money in savings accounts, money market accounts, certificates of deposit and Treasury Inflation-Protected Securities (TIPS).
Yes my wife and I saved and live frugally for the past 20 years but now we are looking at retiring by age 50.
The first step to take to save your way to becoming a millionaire is to pay yourself first! I don’t know who originally coined that phrase but it is so true.
Most people decide to pay all there bills first then save what is left but nothing is ever left. You go out to a resturant, charge it then have to pay the credit card bill at the end of the month.
What you should be doing is save as much of your income as you can. Whether it be 1%, 5%, 20% or what you can save and still live. Obviously the more you save the eariler you can become a millionaire.
Unfortuately right now investment rates won’t give you much of a return but that should change in the coming years. The highest CD rates and savings rates aren’t much more than 1.50 percent right now but I expect rates to increase in the coming years.
So the first step you need to do is sit down and figure out how much you can pay yourself first every week.
I’ll return with more steps on becoming a millionaire.