After recently browsing through dozens of personal finance websites and several hundred articles, one conclusion leaped to my mind: most people have a difficult time saving money. They often focus on the feeling that they are chasing their tail, keeping up with the Joneses.
I'd have to agree with this, from both my own experience, as well as that of close friends. On the far end of the spectrum, there are those people that save and save but never give themselves an opportunity to enjoy the fruits of their labor, and thus end up becoming miserable. What can be done about this?
In the middle are those people who do manage to save money without feeling as if they have sacrificed something. These are the people that have not only learned discipline, they've learned to tie their "sacrifice" with the positive emotion of the enjoyment they'll get from their savings target.
For example, without getting too metaphysical, those saving for a home have determined the benefits they will personally gain from have their own home. They understand this, and they have learned to defer their gratification to a few years ahead by saving instead of spending on small things today just to feel good.
It's maybe harsh to say that, but it's the unfortunate truth. We're bombarded by images of wealth and suggestions of immediate gratification by purchasing this, this or that. My own observations are that adults of only one generation ago were far more capable of saving for their dreams than those of today. For those of us who have succumbed to the "gratification now" way of life, we can unlearn this.
If you fall into the category of people who have trouble saving, primarly because you find yourself spending more than you'd like to, forgive yourself first. Then realize that saving takes discipline - discipline that you can learn.
If your intent is to become an investor, remember that you cannot do it overnight and need to take small steps towards learning about the market and all your investing options. One way is to start simply by saving. (Articles about "finding" money to save will be published shortly.)
Whether you want to learn to save to become an investor, or simply to save your money somewhere safe, you have a couple of options: bank accounts or money market funds. These are the two simplest, low/no-risk investment options that keep your money liquid. You can get at your money if an emergency comes up.
Unfortunately, some money market funds may have withdrawal penalties, such as "back-end" fees, and even upfront charges, such as "load" fees. If you do not have a lot of money saved, you certainly do not want to lose money to excess fees.
That leaves bank savings accounts, most of which provide barely a half-percent in interest. These accounts often require a minimum balance to get a higher, more acceptable interest rate - balances as high as $5,000.
Fortunately, several banks are offering online savings accounts that pay as much as 8 times the interest rate of regular savings accounts. Furthermore, these accounts do not usually require a minimum balance. Examples of such online savings accounts are offered by Ing Direct, Emigrant Direct and HSBC Direct.
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