What is the Snowball Savings?

Credit: Pixabay

By: MJ Gonzales | Executive Chronicles

In the field of investing, we learn that the higher the risk, the higher the yield. That’s the problem for some investors who cannot be aggressive because they’re simply conservative.  If that’s your case, don’t push yourself to risk your hard-earned money. You can always resort to other ways that make your money safe and grow gradually such as snowball savings.

The snowball savings is a method of putting your money in one savings account. Once you hit the maximum limit of amount for deposit, then you just build another type of funds or accounts. As much as possible choose the account that has low tax and give interest.  About the type of account, base it on you intentions and financial goals. Where you intend to use the fund you’re planning to create? Is it for retirement, emergency, business capital, or education? In the report of Bankrate, the smart step for snowball savings is to start with your short-term financial goal that requires a little amount.

‘This strategy is inspired by best-selling author Dave Ramsey, who encourages people to take a “snowball” approach to paying down debt,’ Bankrate explained. ‘This helps cultivate a sense of “winning,” which can increase your motivation to save.’

According to US News, the snowball savings is also a method to make your money work for you soon. Ideally, your first savings account should generate returns that you can use for your other accounts.  The report added that if you like to grow your money faster, add extra earning you get from your investments, bonuses, and tax refunds.

Credit: Pixabay

The snowball savings is not as fast or higher compare to other investments. It’s different from investing in the mutual fund, stock market, forex, and business. However, it promises steady and safe way to grow money. If you can afford to combine these money-making schemes that’s better. In a way, diversification is another way for wealth creation.