When it comes to the savings accounts of the average American, one thing is certain: Many are anemic. Some studies have shown that nearly half of all Americans would have trouble meeting even a $400 emergency. This means that many people are in need of a healthier rate of savings. Here are some ways to strengthen your saving habits and maximize your bank account.
Set Up a Budget
Few Americans are religious when it comes to filling out a monthly budget, and it’s hard to know where the money goes when it’s not tracked carefully. This is where a budget can really benefit most people. A budget can allow people to figure out how much they have coming in, which should have a very direct correlation with how much they have going out. When budget outflows exceed income, there’s a problem that needs to be remedied.
Make Savings Automatic
One way to make sure that there is money going into a savings account each month is through the use of automatic deposits. Many employers will allow for direct deposit into more than one account. A dedicated savings account could be used to capture some of this money so that surprise expenses are not as stressful. Another option for automatic savings is the use of apps that round up purchases to the next dollar. This is the online equivalent of saving your spare change. Of course, for those who don’t use a credit or debit card, it’s still possible to literally save spare change.
Avoid Debt
When looking to maximize your bank account, the biggest tool is a paycheck. The more of that paycheck that can go into savings, the more secure a family’s household budget will be. Any monthly payment that has to come out of the paycheck is a drain on the bank account. This is especially the case with credit card debt, which frequently comes with very high-interest rates that can hit up to 15 or 20 percent. Every dollar that does not go toward interest is a dollar that can be used for more beneficial purposes.
Save For the Future
After getting automatic savings set up and paying down debt, it’s a good idea to look at savings as more of a long-term strategy. This means building up an emergency fund of approximately six months of expenses and then putting 10 to 15 percent of income toward retirement when that emergency fund is full. These steps can definitely lead to getting the most out of a bank account in the long run.