3 Ways to Save Big in a Low-Interest World, Part 2

Let’s face it, our money isn’t worth much these days and it isn’t growing very fast either. Last year, at this time, I set out to begin saving in earnest. My husband and I have always made it a point to spent less than we make. In this way, our checking account has grown over the years. But, except for the IRAs we have, we have not been intentionally “saving” in a systematic way.

 Piggy-Bank-trans

Last year, I set out to change all that and you can read Part 1 of my journey here.

Now, I want to report back and reiterate some of what I wrote last January. First, here are the steps that I took to begin saving:

1. I opened my own personal savings account. I consider the money “ours” but I was tired of waiting for my husband to open a savings account for us. We’ve been married 25 years and he has not yet done it, so I asked if he would mind if I opened my own. He didn’t mind, so I did.

2. Into this savings account each month I deposit 10% of my earned income. I haven’t done this with my husband’s earned income, but he is watching me carefully and would like to begin doing the same now. Yay!

3. I also deposit 50% of any money I wasn’t expecting. Hey, that leaves me 50% to spend, right? So, it’s still super fun. This money comes in many forms, but mostly gifts or unexpected royalty checks. Sometimes it is money that I found somewhere that I had forgotten about. It’s still money I wasn’t expecting, so 50% goes into savings.

Now, I am watching my money grow at 1% interest in an Ally account. 1% is terrible interest, but it is way better (100x better!) than .01% that my local bank is offering. Last January, I had exactly $0 in savings when I started this process. Now, 12 months later, I have $6800. Of that, $27 is interest that I wouldn’t have gotten if it was sitting in my checking account.

I know, I know what you are thinking. $27! That’s really hardly anything! Right, but if I stay on track to save like I did last year, then next January, I will have made about $100 in interest over the course of the year ($127 for the 2 years together). Then the year after that, it will be something like $250 or $300 for that year. Do you see how this compound interest is working? In 3 years time, I will have accumulated about $450 in interest. That’s money I didn’t have before! Over time, this makes a difference, even at a small 1%. Think what could happen if interest rates go up!

So, my charge to you (no pun intended)… Open an Ally or Capital One account. Deposit 10% of your income + 50% of any unexpected money that you receive or find. Maybe next year you will report back on how well you money did in 2014.

Question: What is your strategy for saving money? I’d love to hear!

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This entry was posted on Saturday, January 18th, 2014 at 5:30 pm and is filed under Finances, Lifestyle. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • Keno

    Yikes! Your money could be earning so much better than that! Want to really spice up your financial planning? Check out the financial counselor Dave Ramsey (www.daveramsey.com)

    • / Terri

      Yep, investing in mutual funds is next! :)

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