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How to Be Smart about Saving

Putting aside and accumulating money is easier with these strategies.


  • Step 1: Save for something specific Jot down a few big ticket items you'd buy if you had the money, and then open a savings account for each of them. Studies indicate that putting aside money is much easier if you are saving it for something specific. Once you've saved the money, you may find that you don't want the item after all.
  • TIP: Envision your goal as you make the deposit: Researchers have found that the brain gets almost as much pleasure from imagining a purchase as actually making it.
  • Step 2: Calculate the interest Calculate how much money you'll earn if you put your money in various types of interest-bearing accounts. People often underestimate how fast their savings can grow; crunching the numbers could provide the inspiration you need.
  • Step 3: Have savings automatically deducted Have savings automatically deducted; experts say it's one of the most painless ways to save.
  • TIP: If you get a raise, have the increase added to your automatic savings deduction immediately.
  • Step 4: Use a web-based bank Consider keeping your savings in an online-only bank, where interest rates can be higher, since there are no bricks-and-mortar buildings to maintain.
  • Step 5: Stagger your CDs If you park money in Certificates of Deposit, do what's known as "laddering": Spread money among as many accounts as you can, staggering their maturity dates. That way, all your money doesn't get stuck in a low-paying CD if interest rates go up, and you lock in the higher rates on some accounts if interest rates take a tumble.
  • Step 6: Keep the minimum in checking Keep just enough money in your checking account to pay your bills. Even when interest rates are low, it makes no sense to leave money sitting in an account earning nothing.
  • FACT: Two-thirds of people between the ages of 23 and 28 say financial fitness is more important than physical fitness.

You Will Need

  • Goals
  • Interest projections
  • Automatic deductions
  • A web-based bank
  • Staggered Certificates of Deposit
  • A minimum checking account balance

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