Just a few moments ago I signed up for a high-interest savings account with Citizens Bank. With an interest rate of 3.5%, their Ultimate Savings Account offers the average person a great way to set money aside when they don’t have enough to invest in something larger like a mutual fund but want to have something available for emergencies or future purchases.

Personally; I have found that, even while working over the past six months, I have done little to decrease my overall debt. It seems that no matter how much money I seem to make, my accounts stay the same. This has really been frustrating an disheartening so I decided to take another step towards financial stability.

If you’ve been keeping up with my blog, you’ll know that I have, over the past few months, 1) started to track my expenses 2) put aside $20 per week with Rita into a “whatever” fund and 3) started having weekly meetings to get a handle on my short and long-term goals. This new savings account is the next link in this chain and here is why I’m doing it:

Set it and forget it:

With this savings account, I will automatically withdraw weekly amounts from my main account and keep it separate from my regular transactions. By doing this, my savings will be more like a weekly bill that I pay automatically and will be left untouched itself. It is so easy to spend money when it’s staring you in the face. By removing it from view, I’ll be less likely to spend it and more likely to put it to good use later on.

Save for the future:

This probably should have hit me sooner, but I’m really starting to think about how I’m going to make a down payment on a house, buy my next car when this one gives up, save for retirement, and just live a stable life. Living in the “Now” financially is a very dangerous thing to do since we tend to focus more on short-term purchases and bills while forgetting about future investments or emergencies. It is very easy to feel overburdened by what you owe NOW and keep putting off saving for the future. But, what I have come to realize is that by staying focused on what needs to be paid now and delaying our plans for the future, we are only making the situation worse. Why? Because we always tend to find more things to buy and therefore never get the chance to save for the future. It is an endless cycle; and by the time you know it, 5-10 years has past and you still haven’t done much to move towards your financial goals.

By opening this account and putting weekly deposits into it, I am digging my feet into the ground. Even if it isn’t much, I am saying “enough is enough”–it is time to start saving. Some might say, “well why invest if you’re still in debt.” To them I ask… when will you not be in debt? And are you willing to wait that long to invest? The way I see it, taking money out of my account every week will force me to be more strict in other ways–maybe I’ll stop spending as much on restaurants and impulse buys. In the end, this method will allow me to save for the future while still being able to deal with what I owe now.

Invest in small amounts:

I couldn’t tell you the number of times I have researched investments–be they mutual funds, GICs, or other methods–and then decided that I just couldn’t do it at the time because of the minimum investment required. For a student working part time–or a fully-employed person with a house for that matter–it is hard to come up with a lump sum to put into an investment. What the high-interest savings account allows you to do is put aside small amounts of money frequently so you can build up to a goal. I think of this as an investment in small amounts. It can painlessly (or at least less painlessly) help you move towards something like a down payment on a house or a sum of money that you can use for some other type of investment. As far as small investments go, the high-interest savings account seems like a pretty good option–especially since this account offers 3.5% and my primary bank (Royal Bank) only offers ~2% on a GIC!

Taking control:

The main goal for me in the next few years is to create a set of financial habits that will allow me to become more financially stable and build a comfortable amount of wealth so I’m not constantly struggling to keep up. It is a small start, but this savings account is a step in the right direction and will be a tool I can use to save up for bigger things in the future or to bail me out of emergency situations.

A separate savings account is a good idea for anyone looking to become more financially stable and is recommended by many professionals–whether it be used as an emergency fund for car troubles or an unfortunate job-loss, to diversify your portfolio, or simply as a way to wisely save up for a toy you’ve wanted for a long time. If you’re interested in finding out more about high-interest saving account option you can do so here (for Canada) or here (for the USA).