Social Savings Accounts Are Effective Tool to Reach Savings Goals
February 02, 2009
Social savings accounts are savings accounts in which a common savings goal is established for a community of friends, family, or peers. Major financial events like saving for college tuition or for a wedding can be the purpose of a social savings account or something as simple as that dream vacation, big party, or special event. Social savings accounts have some major benefits over traditional savings accounts as detailed below:
Publicize Your Savings Goals
By publicly stating and then promoting your savings goal, you stand a much better chance of soliciting contributions from friends, family, and peers. Online tools like blogs, Facebook, MySpace, and Twitter can all be used to update your network about your savings program and to thank them for their contributions. Communicating online may lack some emotional appeal, but can be a highly effective way to describe the purpose of your savings program and how each contribution no matter how small can help. Privacy controls can allow you to determine who can actually view the details of your savings program.
Budget Your Savings
Creating a social savings plan can be a more disciplined approach to savings than putting money away on an ad-hoc basis. Monthly deductions from your checking account to your social savings account can become as routine as paying your electric bill over time. In addition, a social savings plan will impress friends and family that you have a high level of financial responsibility.
Compound Interest at Higher Rates
With interest rates at historic lows, more savers are disregarding the actual interest rates paid on their savings accounts. This is a mistake as there is nearly always a spread of a full 2% to 3% (200 to 300 basis points) between the highest rates on savings accounts and those offered by local banks and large multi-state banks like Bank of America or Wells Fargo Bank. Social savings sites are expected to increase as more people turn to the web for help managing their money. SmartyPig is a an existing site that allows visitors to open for free an online social network which includes a FDIC-insured savings account at WestBank in Iowa. Savings goals that are met can be converted into debit cards or gift cards which include cash incentives. The SmartyPig savings account is currently yielding 3.25% and has consistently been listed as one of the savings rate leaders from banks in the United States.
Whether you use a social savings site like SmartyPig or your own Facebook page to promote your savings goals and plans, creating a social network can help make that goal attainable. Check Money-Rates.com for the latest news on social savings sites.
