by
John Hall
High Yield Savings On Autopilot
I'm very excited you made the decision to never be broke again. It truly is a shift in mindset. There's no right or wrong amount. There have been times in my life where I literally saved as little as $5 a week. You are the expert when it comes to your finances. If you have no debt and your expenses are low, you should be saving as much as you possibly can. If your budget is really tight, refer to this article to streamline your cash flow first: https://wealthlegion.wixsite.com/wealthlegion/post/debt-strategies-and-the-story-of-kenya
Let's assume you have direct deposit setup through your employer. You can go to your HR, or possibly login to your company intranet and add your savings account information there. Decide what amount or what percentage you want to contribute from each paycheck. This is ideal because you will not see the money ever leave your bank account and you're saving automatically. The other option is linking your new high yield savings to your main checking account and immediately scheduling recurring transfers. There are a few hard rules that I'm going to impose to help you have a solid plan.
Rule #1 - Your savings account MUST be at another financial institution from where your normal checking account is.
Rule #2 - Pick a savings account that suits you the best and offers the highest yield.
Rule #3 - You are not to withdraw from this account.
Keeping a savings account at your main financial institution as a small backup to cover overdrafts, or small emergencies is ok. The reason you don't want to have your main savings account at your primary financial institution is because you need to limit your immediate access to your money to prevent impulse spending. If your checking has $2000 in it and you go to Best Buy and find a $3000 television on sale, you can easily transfer some cash from your savings to your checking, right from your mobile app in the store. These are the situations you want to avoid.
When your money is in your high yield savings account at another bank, you'd need to manually initiate a transfer and it will take a couple days for the money to arrive. This allows you the time to acknowledge that you were making an impulse buy, or that you're making a decision that is not aligned with your financial plan. In addition, the interest rates being paid on savings accounts where you hold your checking account are unbelievably low compared to when you shop around. If you're going to park your cash would you rather someone pay you the least, or the most?
Selecting the right account for you may take some research, or maybe you just care about the bottom line and want the highest yield available. It all comes down to what works best for you. The accounts that pay the highest are online banks. Due to not having to pay to operate a brick and mortar operation, they pass the savings on to you, the consumer. To begin your research, I stand behind the research of Nerd Wallet. Nerd Wallet has been a trusted source for me for years. Just search "Savings Accounts" on their website and you'll see they provide great information. Feel free to cross reference with additional research, but they are very thorough and should be all you need to make a decision. https://www.nerdwallet.com/
Two that consistently pay High Yields are:
Disclosure
*Wealth Legion is not affiliated with Goldman Sachs or Synchrony bank in any way. Wealth Legion holds no investments or has any financial interests in either organization. Wealth Legion is not being compensated in any way by sharing the above links, or making mention of Goldman or Synchrony.
Once your account is setup, enable your Autopilot Savings System.
The first thing to do is schedule automatic recurring transfers from your checking account. Do this from your new online account, or set up the transfers through your employer, as mentioned above. Select the amount that fits your financial plan and budget. i.e. $150 every two weeks, or $25 a week. As a general rule, you want to save at least 10% of your income. This is like doing one push-up. It is a good place to start, but over time, you'll learn how to do even more.
This account will become your financial freedom account. You will use this money to continually make more money for the rest of your life. One day, you may use the savings to put in an IRA, or another type of investment, but you never spend this money. Remember, you've already made the decision to never be broke again. This money will ensure the continuous rise of your net worth. You can learn more about the concept of a Financial Freedom Account in the book, "Secrets of the Millionaire Mind."
This money will really begin to add up. Do not withdraw to go on vacation, or even for an emergency. The more you see this account grow, the greater you'll feel about the work you do and the financial success you're starting to build. Over time you will find new ways to save and you will look back on the decision you made today, thankful that you committed to never being broke again.
*Key Takeaway
If you pay bills, the number one bill that needs to be paid first is yourself.
For every dollar you earn, put $0.10 in your Financial Freedom Account.
Wealth Legion will teach you savings hacks, tips, and ways to find more money to build your account even faster.
You now have the understanding of how to set up your High Yield Savings Account. You can go on and live your life knowing that you're earning the highest interest on your money. You will get paid from the bank once a month into your account and seeing that number grow every month will give you great satisfaction. Even though it may be small amounts in the beginning, you're now earning money while you sleep. Play around with this basic savings calculator and dream big. http://www.interest.com/savings/calculators/savings-calculator/
Read Our Companion Article: The True Cost of a Pair Of Jordans