I have a close friend who doesn’t save money. I don’t think it’s because she doesn’t want to, but more so because she feels she can’t afford to save money. Can’t afford to save money? WTH? How can you have a full time job or make an income online and not be able to “afford” to save money?
The percentage of savings should be saving for retirement varies from year to year. But, 10%-25% is a good starting point. And, over time, it will fluctuate depending on your financial situation. Everybody absolutely will not be able to save the same amount every month, but you have to save SOMETHING.
My friend’s reasoning is that she needs every dime of her paycheck every week to survive. Well, this sets off a red flag immediately. There are two things that jump out to me right away. The first thing I suspect is that she’s living beyond her means. Many Americans, and even in other countries, spend beyond what they earn every month. The flat screen TVs, Apple computers and other toys consume our thoughts and wallets. And let’s not even bring up the issue of credit cards.
The good entrepreneur is one who can balance the pressures of fluctuating income and being able to reinvest that income back into your business to help it grow. If you want to save money, the best way to do it is to “protect it” from yourself. How do I protect my money from myself? Here’s what my two step process:
Why Save Online?
Sorry to sound like a broken record, but yes, you need to save your money somewhere other than your piggy bank and mattress. One reason is that your money won’t gain any interest in your piggy bank. As I mentioned before, I prefer to do my banking online . I do this because the money I save is harder to get access online. When one is saving money, the harder to access your money, the easier it is to save it. Also, with most online savings accounts, it takes 3-5 days for your money to transfer between accounts. Another useful deterrent to saving online.
As far as what online savings account you should open up- it depends. Usually, the only things you really need to pay attention to are the rate and how often the banks raises and lowers those rates. Here are some online savings accounts you might be interested in. (Rates are current at the time of this post)
Ally Bank (1.09% APY)
ING Direct (1.10% APY)
HSBC (1.00%, but you only need $1 to open account)
Whether you’re saving for a huge purchase, like a flat screen HDTV, or saving for retirement, opening an online savings account will definitely help in controlling your spending. Sign up for direct deposit automatically and start small. Contribute $20.00 to start. Once you become comfortable, add more money and before you know it, you will have a nice little nest egg to do whatever you want with it.
Doing it this way will save you more money and interest tha stuffing it under your mattress. ;)