The following is a contributed post.
Everyone needs a nest egg, whether it is money for retirement, funds to send a child to college or just a little extra cushion against emergencies that pop up now and then.
To grow your nest egg to its fullest and get the most out of your savings, make sure to follow these tips:
One of the best ways to feather your nest egg is to make sure you are getting the best return on savings. These days, interest rates are abysmal, so every little bit counts.
You can compare savings accounts online to find the best rates. You may also be able to increase your rate by putting your savings in a money market account.
Another way to increase your return is to take advantage of any special offers your bank has. For example, you may be able to get a better rate by doing a direct deposit.
Once you have garnered the best rate possible for your savings, the next step is to make sure you are taking every opportunity to save.
Put as much money as you can in savings. For example, any time you get a raise or a bonus, automatically dedicate a portion of it to your savings.
Also, make savings automatic. Set up a direct deposit plan for savings in which you have a certain amount deducted from checking and added to savings every month. If you have an automatic savings plan at work, such as a 401(k) account, make sure to take advantage.
Another way to grow your nest egg is to not pay any more than you have to in taxes. Unfortunately, the U.S. doesn’t have the equivalent of a cash ISA savings account like they have in the UK. A cash ISA savings account is an account that allows people to save money tax free.
In the U.S., the closest equivalent is an individual retirement account. You can place up to $5,000 into such an account annually tax-free or $6,000 if you are 50 or older.
Other types of savings accounts that allow you to avoid or defer taxes are health savings accounts, flexible savings accounts and education savings accounts.
Health savings accounts allow you to save pre-tax dollars to spend on health expenses, but you can only open one if you have a high-deductible health plan.
Flexible spending accounts allow you to put away tax-free dollars to pay for health and childcare expenses, while educational savings accounts allow you to put away money to pay for college for a child.
Whether you use one of these methods or all of them to feather your nest egg, you should start saving as early as you can. The earlier you start, the more time you have to build up your nest egg and let your savings grow.
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