Saving money on a consistent basis, regardless of the amount, is the true secret to financial victory. The strategy is simple. And thanks to technology, putting it into place can be simple also. So where do you start?
First you figure out what amount is workable FOR YOU, not anyone else. Then you take all the monthly cash flow that YOU can spare and start saving it into an account with the best interest rate, growth potential, tax advantages, and principal protection you can find AUTOMATICALLY, be it monthly, weekly or daily. Finding the best account is where a financial professional is key. Don’t go it alone.
These habits have created more millionaires than any other story, company buyout, or stock market windfall in the history of the world. The 8th wonder of the world—the power of compound interest—is the magic dust that will always work in your favor if you’ll put it to work.
Saving money is more about the decision than anything else. Just like breaking the cycle of foolish spending, you must DECIDE to save money on a consistent basis. When you do, over the years and decades, you will win because you’re employing the Time Value of Money and the Power of Compound Interest. This is the one-two combo that millionaires use to reach their status.
There are many culprits that can hamper your ability to build wealth.
Believe it or not, your checking account might be one of them.
A checking account is designed to give you quick, flexible access to your money—not grow it efficiently. That’s why the interest rate for an average checking account is negligible—less than .05%.¹ It might as well be zero if you’re considering it as a savings tool for the future.
But you may already be thinking, “no one would consider their checking account a savings vehicle.” Then why do Americans have so much of their money stashed in them—$2.2 trillion in 600 million checking accounts, to be precise. ²
The answer can only be that they don’t know how money works. Otherwise, they would have moved their cash to an account that leverages the power of compound interest with a higher interest rate long ago.
The sucker likes seeing a big balance in their checking account. The wealthy like seeing big deposits moved into their wealth building vehicles.
Do you have too much money sitting in your checking account?
As a rule of thumb, only keep enough cash in your checking account to cover everyday expenses like utility bills and groceries. Move what’s leftover into accounts and vehicles where it can accrue interest at a faster rate. And consider scheduling a conversation with a licensed and qualified financial professional to discuss which saving vehicles are best for you!
¹ “Average Bank Interest Rates in 2021: Checking, Savings, Money Market, and CD Rates,” Chris Moon, ValuePenguin, Dec 11, 2021, https://www.valuepenguin.com/banking/average-bank-interest-rates#
² “Checking Accounts Shrink by Nearly 100 Million Accounts Since 2011,” Tina Orem, Credit Union Times, May 8, 2018, https://www.cutimes.com/2018/05/08/checking-accounts-shrink-by-nearly-100-million-acc/#