One great way to boost your high-yield savings account now
Saving is an important part of just about any financial plan. No matter what age you are or how much money you earn, putting some aside for the future is crucial if you want to be financially secure later in life without working well into your retirement years.
And, putting money into a high-yield savings account is a great start, but there is more to do if you want to maximize the amount of money in your savings.
You can start saving today by opening a high-yield savings account.
How to boost your high-yield savings account now
The first step to savings is to make an initial deposit into your account. This is the building block of your nest egg, and it will grow over time. But unless you're sitting on a serious amount of cash, it probably won't be enough to cover all of your savings needs.
There is another step, though, that can help you take your savings to the next level.
Set up automatic deposits
The key to savings is to keep doing it over the long run, and this means making periodic deposits into your account. That said, many of us lack the discipline to manually move money to savings every month. Luckily, there is a way you can be sure that more money goes into your account on a regular basis: automatic deposits.
Most online high-yield savings accounts will give you the option to set up automatic deposits. You simply have to link your high-yield savings account with your checking account and choose how much you want to move to savings on a regular basis — whether that's weekly, biweekly or monthly.
How much you automatically deposit in your savings account will depend on your overall financial situation, but in most cases, it makes sense to try to save as much as possible. If your situation changes and you can afford to put more money into your account, be sure to take the steps to increase your automatic deposit.
Shop online for a high-yield savings account right away.
How much money will this earn you?
To show how much more money you can save by putting on an automatic deposit, let's do some quick math and compare the results.
First, for the examples below we will assume an initial deposit of $10,000. Second, we'll use a consistent interest rate of 4.5%, which is in line with the interest rates being offered by high-yield savings accounts right now. Keep in mind that interest rates for high-yield savings accounts are variable, so if the rate environment changes, you could have a lower rate down the line. For the purpose of this exercise, though, we will keep the rate consistent.
If you put $10,000 into a high-yield savings account with an interest rate of 4.5% and don't deposit more money into the account, you'll earn $5,529.69 in interest and have a total nest egg of $15,529.69 after 10 years.
But let's say you start with $10,000 in the account but also deposit $50 into the account every month. After 10 years you would have contributed $6,000 extra dollars and earned $7,053.48 in interest, leaving you with a total account value of $23,053.48.
Finally, let's look at what happens when we increase our monthly contribution by 10% each year. You would make an additional $9,562.45 in deposits and earn $7,553.44 in interest in 10 years, for a total of $27,115.89.
The bottom line
Savings are a key part of financial health, and a high-yield savings account is a great way to store your money and make it work for you. Setting up automatic deposits each month can help boost your savings and make it easy to put more money away.
