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Here are three basic and simple ways to grow your savings faster. 1. Open a high interest savings account. 2. Save your money automatically. 3. Put your tax refund or bonus into your savings account. Note that this blog and this article may contain affiliate links and adds. See our disclosure policy.
High Yield Savings Accounts are designed to help you grow your savings. They offer a much higher interest than a traditional, basic account.
They are also convenient because you can easily transfer money from your checking account to take advantage of the higher. Another advantage of creating an online savings account is that you earn more money and save even more through compounding interest.
If your money is earning compound interest, there is no doubt that your savings will grow faster. Compound interest is earning interest on interest, meaning that you earn interest on the money you deposit (the principal), and you earn interest on the interest you have already earned.
To illustrate: if you saved $10,000 for 5 years at 5% interest per year, with interest calculated and added monthly, you would earn $2,834 in compound interest after 5 years, giving you a total of $12,834.
Thus, your money in an online savings account with compound interest will grow your money much faster than a regular account with smaller or no interest.
Save your money automatically
Another way to grow your savings faster is to save automatically. How you do that is have your bank transfers a certain amount from your regular checking account to your high interest savings account. It can be as little as $50 every pay period.
Why is it important: one is you don’t have to do it yourself every pay period and as the saying goes what you don’t see, you won’t probably miss. Second, these automatic deposits add up over time. Your $50, if you choose to do it on a monthly basis, gives you $600 a year plus interest that has compounded.
Save your tax refund or bonus. Most Americans will receive some a tax refund this year.
And some will receive some type of bonus from their employers. See our article on how to use your bonus for more information. If you are receiving a tax refund next year and/or a bonus, put some or all that extra cash into your savings, instead of buying something you might not really need.
In conclusion, if you want to grow your savings faster, do these things: open a High Yield Savings Accounts 2. Save your money automatically, and 3. save your tax refund and/or bonus.