Work Hard, Play Hard, Save Smart

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Work Hard, Play Hard, Save Smart

Poolside cabana, $200 a day. Plane tickets to your destination of choice, $750. Vacationing without worrying about putting a dent into your finances, priceless.

For those fortunate enough, vacations and getaways can easily fit in their budgets. For the rest of us, without the appropriate planning, it can truly be a hardship to budget for a vacation. But if you start saving now and plan ahead, a fiscally worry-free vacation is really not out of reach.

Plan ahead. Research the cost of your vacation and put a savings plan together that aims to cover most to all of your vacation expenses.

Whether you make a lump sum or monthly deposits into an account, make sure you research the best bank product that will get you the most attractive interest rate available and allow you to reach your goal to pay for your dream vacation. Don't forget to consider time and how early you need to access your funds when creating your savings plan and choosing your bank product. For instance, if you only have five months until your winter getaway, a 9- or 12- month CD would not be a good choice to use to save for this trip. In this case, high-yield savings or money market accounts or short-term CDs would be better options to consider.

There are many great rates out there, along with promotional offers that will provide you with the best return. Compare the best deals for your financial profile.

Schedule automatic deposits now to ensure your savings will continue to grow. The fastest way to reach your savings goal is to start now and contribute regularly, and automatic transfers will ensure this happens. For example, depositing $1,000 into a savings account earning 3.25 percent will yield only about $30 in one year. However, if you schedule $200 to be deposited into the same savings account every month, your account will total nearly $3,500 by the end of the year!

What are you waiting for? The sooner you start, the sooner you'll reach your goal, and the sooner you'll be relaxing at your dream destination!

Source: Informa Research Services

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Mostly fluff

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The math in this article is wrong. I don't know where you got your figures from:

Depositing $1,000 into a savings account earning 3.25% will yield about $32. Your analysis for this is correct.

Scheduling a deposit of $200 once a month will NOT yield $3,500 in a single year. In fact, it will yield LESS than a single large deposit. If you deposit $200/month, you are spending $2400/year on savings. If you make 3.25% compounded monthly, your balance at the end of the year would be $2436.07, a gain of $36.07.

If you made a single $2400 deposit in the beginning of the year, with interest compounded monthly, your ending balance would be $2479.17, or a gain of $79.17, more than twice as much as a steady flow of money into the account.

Either way, neither of these values are anywhere near $3,500. Please correct the article.

The article suggests both depositing $1000 and saving $200 per month. That is the differential in the savings amounts.

Review by
CK Moderator

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I read it the same way - the article is not written to imply that the $1000 is deposited WITH $200 monthly contributions on top. "The same savings account" does not imply that it had the same deposits. Now if it had been written "...if you schedule an ADDITIONAL $200..." I would agree with CK.

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Get Real real interest comes from compounding it!

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