A Lesson in Finance: Take Advantage of Higher Interest Savings Accounts

OK, time for a little review. We began our first lesson telling you to get a job. Then you were told how rich you are right now and the need to keep track of where all your money is going. Finally, you were given some motivation to start saving your cash now for the tsunami of bills that are coming your way.

Now we can move forward. This lesson is all about saving your money with ease.

To begin taking charge of our money, we must use the tools out there that make spending our money easy to do. The great thing about this plan is it is flexible to accommodate a wide variety of income scenarios. It can be used no matter how much you make, just as long as you have money coming in on a regular basis — either through an allowance or paycheque. The amount of money can also vary from one paycheque to the next.

There are numerous saving products offered by the banks. Unfortunately, many, such as savings bonds or Guaranteed Investment Certificates, require that you have money already saved up before you are able to purchase them. Once we have saved up enough cash down the road, we can then look at these in greater detail.

For now, it makes the most sense for you to open a higher interest savings account along with your regular banking account. This can be done at your local branch or online. Once you have set up your savings account, saving money is as easy as a tap on the screen.

To start, go back and look at where you are spending your money, and find out how much you need to live on and what you can afford to save. You can even put some rules in play — just make sure they are flexible enough no matter how much your pay changes each period. Let’s say you find that you can get by just fine on $80 every two weeks. Then anything you make over and above that amount can be saved.

Say you got paid $262 after deductions in the last two weeks. With a quick tap of your phone, you can easily transfer $182 to your high interest savings account. Do that for the rest of the year every two weeks and you will soon have saved close to $5,000 — and that’s not including interest!

Some financial planners suggest setting a preset amount of money to be automatically transferred into your high interest savings account after every pay period. The problem with this approach is that the 

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