What are sub-saving accounts?

These are accounts within your bank account.  If your bank has the feature to have multiple saving account, you can open saving accounts online to save for whatever you want.  Let say you want to buy a new car in two years, you can open an account and call it “New car fund” and have a percentage of your savings automatically sent to that account every month.  This will help you from spending your new car money and give you a little back up if your old car need fixing.

Sub-saving can be use to save for anything and is a great way to help you get in the habit of planning ahead.  This can also help you complete your goals on time, you eliminate one of the main two reasons our goals get side tracked… lack of funds.

There are a couple things to watch out for when setting up these sub-accounts.  I have found it is best to have money routed from you main saving account. Having it taken from your checking account can lead to the risk of being overdrawn.  If you need to, you can increase the amount being sent to your main saving account to accommodate and since more money is being taken out of your accounts be sure to keep a close eye on your checking at first.  Be careful if your bank has fees related to their saving accounts,  some banks still offer free checking and saving accounts.  If you have no idea how to setup these accounts, go talk to you account manager at your branch or call your bank.  You account manager is there to help and most people never utilize there service.  A good account manager should have the answer to all your questions and be able to help you with all your banking needs.

Having these sub-accounts will help reduce over spending and is simply just another great way to help you manage your money.

Remember when personal finance planners were note pads with a calenders and a calculator? Well, they have come a long way since those days. We have seen them transform into desktop software and now full blown websites that does most of the work for you. Take mint.com for example, this is a personal finance planner on steroids. Mint is only one of the many personal finance managers on the web, but I have to say it is one of the best.

Lets say you have no idea how to invest, budget, or just anything about personal money management period. You basically have three choices when it comes to learning. 1) Just throw your money in a bank and hope you are getting the best rates and hopefully one day you will have enough to retire with. 2) Hire a personal finance manager to guide you in what they think is best for your money. 3) Take the bull by the horn and learn to choose your own savings accounts, make your own investments, manage your own retirement fund and have something to pass on to your children. I don’t know about you, but number 3 has been a life saver for me and financial planners/managers like Mint has been making it easier by the day. It’s like hiring a financial planner that you never have to pay.

You can track your spending, find the best savings and checking accounts for your lifestyle, set up and maintain a budget, follow your investments, get alerts and more, all in one place. It is a one stop financial manager with everything you could possible need to get you started getting your financial life in order. Yes, personal finance planners have come a long way from the days of the note pad with a calculator, now its as easy as clicking a few buttons.

First let me explain how it works. Let’s say a mother has been very responsible when it comes to her bills, she has been paying on time and has built up a top notch FICO credit score. Now her daughter is of age and wants to start building her credit. The mother can place her daughter on her credit card account as an authorize user and within a short period of time, her credit score will transfer over to the daughter. To lenders, it will seems as if the daughter has been responsible and has build up her credit.

Piggybacking is a practice that has been in existence for many years and almost came to an end in 2008 due to abuse. Thanks to the FTC and the Federal Reserve Board, Fair Isaac Corporation revamped the practice with new rules. It is still as effective and being used by many to boost their credit scores.

To continue with my mother and daughter example, if the daughter was to miss a few payments, her mother’s credit score would take a hit as well and visa versa. Banks report authorize user information to the major credit reporting companies Experian, Equifax, and Transunion. As you know, anything dealing with credit is very delicate and every little mishap could take years to clear up.

If you are considering adding an authorized user to you credit card account, make sure you keep a close eye on your statements. If you are adding your child as an authorize user, try to limit the amount they can spend until they prove that it is something they can handle. Credit is a form of trust and once its broken it will take years to fix.

We are all in the same boat when it comes to our finances as of late. Even large companies like Wal-mart are strapped for cash and some others are going under.  This recession is proof that we never know what will happen tomorrow.  Being ready for the future is a major part of life, but most forget the number one way to prepare.  Saving a little of our monthly income is the best way to cushion ourselves for financial setbacks.

For many of us, saving is not simply depositing the money and forgetting about it.  We will dip into our accounts, skip on making deposits, and stray away from our budgets (If we have one to begin with).  This always hurt us financially in the future, but there is good news.  There are simple solution for these problems that you can implement with a few phone calls and a little paper work.

Direct deposit is a great way to help prevent unwarranted spending. Study shows that people are less likely to spend money if they have cash VS credit cards or debit cards. As the saying goes “Out of site out of mind”.  Another great resource we have at our disposal is automatic bill pay, which we can set up to pay recurring bills every month.  This is a valuable tool that most do not utilize or simply just don’t know about, ask your bank account manager to help you with the details.  Most bank offer this service free of charge.

Time Deposit Accounts (CD’s) are one of the best type of saving accounts for people that have problems saving.  The minimum amount for these accounts are higher than regular saving accounts, usually $1,000 , but if you look around you can find some that require a smaller deposit.  IRA CD’s are great for those looking to starting a retirement fund.  Make sure you do some research and find the best IRA CD rates available to you.

There are two great features that make CD’s a must for everyone…
1) You will have to leave your money in the account for a set period of time before you can make withdrawals without incurring a fee.
2) The interest rate on CD’s are usually much higher than normal savings accounts, this is a great way to make your money work for you. You will earn money just because you have money, if this is not motivation then I don’t know what is.

Now, if you Have direct deposit and automatic bill pay setup to put a small amount into your CD’s every month, you will not have to deal with it manually and are more likely to forget that you’r saving. This is a very powerful way to prepare financially for an uncertain future.  Money management is an important part of life and should be taken seriously, so take the steps and get started on the right track.