In order to get out of the cycle of being financially poor, you need to make your money work for you instead of you working for it. One of the ways to do this is by having your money earn interest instead of just sitting in your bank account like a mooch on your couch. You want to make sure as much of your money is working as possible.
One of the best things you can do is to make your main account earn interest. There are several places you can use to make this happen.
If you go to CheckingFinder.com you can compare different high interest checking accounts that can pay up to 4-5%. There are requirements though, like you have to use your debit card 10-12 times a month and setup a direct deposit among other things. Also, the high interest usually only applies up to a balance of $20,000…if you have that much.
I will be doing this for sure when I live without roommates. Currently I’m with Bank of America, as well are my roommates, and it’s free to transfer between accounts. I transfer several times a month to a couple of different people so this is a convenience that keeps me there at the moment. But when I’m gone, I’m going the route of high interest checking. Another benefit is ATM fees are usually refunded at the end of each month, so it’s free to withdrawal from any ATM.
You could use the high interest checking to hold your savings but there’s no way to separate your savings from your regular money if you keep it all in one account. If you think you can then by all means do it but for those that want to separate the two I’d open up a high interest savings account. These days the interest is only 1-2%. There’s not that much difference between companies so be sure to find one that fits your needs.
I use and recommend ING for savings. It has a competitive interest rate and no fee, but what keeps me there is the ability to open multiple subaccounts and name them different things. It makes saving for goals so much easier.
One of the best investment vehicles is an employer 401k. Most companies that offer this as a benefit will match up to a certain percent of your income that you put in. For instance, I put in 6% of my income and my employer matches up to 4% completely and half of the next 2%. So if my pay check is $1,000, I put $60 in and my employer will put in $50. That’s $50 of free money. There’s no easier way to maximize your money. If you’re not at least putting in as much as your employer match you are missing out on free money.
If you don’t make your money work for you no one’s going to do it for you. Take charge of your life and make a change for the better.
How do you make your money work for you?