To read Part 2 of the Online Savings Accounts Series, go here.
How to save money when you don’t have money to save
We’ve been talking about online savings accounts, because I really love mine. In addition to the high interest rates I talked about in Part 2, I’ve found that having online savings accounts is one of the simplest, easiest and best ways to quickly boost your financial position.
You may be sitting with some money in savings at your local or big box bank and could benefit from moving it to an online account — where your money is able to earn more money.
Or you may be reading this series thinking this all sounds nice … but you’re telling yourself it doesn’t actually apply to you, because it’s the step BEFORE this you’re struggling with – the step that involves actually saving money.
You may be telling yourself you’ll open an online savings account “as soon as I save some money.”
I know it seems counter-intuitive, but you’ve actually got it backwards.
You’ve got to open the account in order to start saving money.
If you know you will earn money on your savings, that knowledge inspires you to want to save even more money!
If you build it, they will come.
You may be telling yourself, “It doesn’t seem worth it.”
But it IS worth it.
Last week I gave the following example:
$5,000 in savings at .01% = $5,000.50
$5,000 in savings at 4.25% = $5,212.50
Now imagine you have $10,000 in savings.
Now imagine you have $25,000 in savings.
Because the way you want to make today’s money decisions is with your future in mind.
Maybe today you barely have $200 to throw into savings, so any interest on that feels like pennies – “It’s just not worth the hassle.”
First, I would argue 4.25% of $200 is STILL $8.50 and if $8.50 isn’t a big deal to you, you can give it to me! It’s $8.50 more than you have today.
And the best part? You made that $8.50 by doing absolutely nothing besides letting your money sit there.
I would rather earn money on my money than clip coupons.
Second, I would argue that it’s the habit you just created that is worth even more than $8.50.
Seeing your money EARN money every month, even if only a few dollars, HAS THE POWER TO CHANGE YOU.
When you first start managing your money, the financial gains aren’t immediately massive. Those come later. But building your foundational habits are what help you get to the point where massive financial gains start.
I want you to imagine there are two sets of habits you need when it comes to your money:
- You need foundational habits that help you manage your money and all the everyday moving pieces that come with it.
- You need more advanced habits that help you accelerate and manage your wealth.
Having an online savings account, where you can see your money earning money each month, is both a foundational AND an advanced habit. I can’t begin to describe how critical it is to your overall journey — to prove to yourself that you do smart things with money. That you ARE one of those people whose money is working for you while you sleep. This is the perfect way to start.
Here are a few of my favorite ways to use online savings accounts:
- To help gain control of cash flow. This allows you to plan for the big expenses coming up in life.
- To save for emergencies. This is one more way to strengthen your financial resolve even more.
- To save for bigger life goals. This creates connection and purpose between your habits today and the future you are creating.
What is one thing you have coming up?
Create an online savings account and title it for that upcoming event or purchase.
This is how you start saving with purpose!
Have I mentioned that I love my online savings accounts?
Your ability to save money starts with opening an online savings account, not the other way around.
In Part 4 I’ll tell you exactly how to open one!