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Savings Accounts

One of the first things you should do when beginning your employment is to open up a savings account and begin a regular savings pattern that will stand you in good stead for the rest of your working and retirement life.

Why open savings accounts

We should all open savings accounts and get into the habit of putting money away on a regular basis. This will help us in our adult life when we need to save for things like a car or a mortgage deposit.

Advantage of Savings Accounts

Savings accounts train you to save money on a regular basis. You will need to make personal loan or home loan repayments on a regular basis in your adult life, so learning how to save and go without your whole pay packet from an early start gives you an advantage. In addition to not having to borrow as much money, you also won’t feel the effect of ‘all of a sudden’ having to do without your whole pay.

Types of Savings Accounts

There are many different types of savings accounts to choose from. The accounts are called savings accounts because you are saving for a goal.

You can open a savings account for:

• A deposit for a first or new car.
• A house deposit.
• An investment to buy shares or property.
• A holiday. You can enjoy your money with an overseas trip.
• Save for your wedding and honeymoon.
• Save for home improvements.

Primarily, savings accounts are your first look at building your wealth for your future.

You should always save your money in an account that offers you a higher rate of return than the everyday savings and transaction accounts.

Some of these accounts offered by financial institutions offer next to zero interest return on your money (.01%).

You can get a decent return on your savings account with all the features, (internet, telephone and statement) attached to your savings account without the need to worry about maintaining a balance above a certain level.

Earning More Money from Your Savings

Do you even realize that by putting your money in a bank, you also get to help people who need loans? The bank or financial institution uses your deposit to finance loans. This is why you to get to earn an interest from the amount you maintain in your deposit. You get a fraction of what the financial institution is actually earning. In some cases, the interest may be compounded on a daily or monthly basis, depending on the specific terms of your account. The payment schedule may also range from monthly, quarterly, to bi-annually or yearly. Of course, the total amount you'll earn will be based on the interest rate. Because of the cutthroat competition, fixed interest rates don't exist. As such, some banks may offer a higher rate with minimum balance requirements, while others have lower rates without any restriction on the amount your should leave on your savings account.

Opening a Savings Account

Before you open an account, remember to shop around for the best interest rates. Make sure that the terms will also be beneficial on your part. Remember that financial institutions that offer higher rates usually ask a higher amount of deposit that you need to maintain and may limit the number of monthly withdrawals. Just because the bank gives you a lower interest rate, it doesn't mean that you don't get a better deal. Others also include package deals and discount privileges as part of their plans. In choosing a bank, think of its location and branches to serve you more conveniently. Only invest your money in banks that hold a solid reputation on finance management.