How to use ActivMoney savings account to reach your financial goals

Achieving your major life goals and financial priorities requires saving money in a strategic way. Simply putting money in a low-interest savings account with little planning will not do the trick. You need an automated solution that maximizes your returns while providing the flexibility to withdraw money penalty-free when needed. The ActivMoney savings account is an ideal tool for managing multiple financial goals. Read on to find out more.

What is ActivMoney?

ActivMoney is an auto-sweep feature offered by banks that allows account holders to automatically move funds from their savings accounts into higher interest-earning deposits. With ActivMoney, you can efficiently manage your finances to achieve your financial goals. 

Set your key financial priorities

The first step is to determine your most important financial priorities and goals. These may include building an emergency fund, saving for education or retirement, paying off debt, or funding a vacation. Identify your top 2-3 goals to focus on to make the best use of the ActivMoney feature.

Start with an emergency fund

If you don’t have an emergency fund yet with 3-6 months of essential expenses, make this priority number one. Aim to save enough to suffice your essential expenses for 6 months before booking ActivMoney deposits. You want immediate access to emergency funds without penalty if needed.

Automate to build your balance faster

The key is to automate as much as possible by setting up automatic monthly transfers from your regular income sources like salary accounts to build up your balance in the savings fund. Even small amounts of ₹2,000-5,000 per month will add up quickly when compounded at a high interest rate in an ActivMoney account. Increase the amounts when possible.

Book higher deposits to maximize returns

Once you have accumulated at least ₹25,000 in your savings account, you can book ActivMoney deposits automatically in ₹5,000 increments. The higher your balance, the more that gets swept into ActivMoney, where it will earn higher annual interest. Make additional lump sum deposits when you have extra money to add to book larger ActivMoney amounts.

Withdraw when needed with zero penalty

A top benefit of ActivMoney is the ability to withdraw money penalty-free at any time. You can shift money out of ActivMoney back into your savings account instantly as needed for any of your financial goals or expenses. The interest you earned is credited to your balance, even if withdrawing before 180 days.

Review and rebalance as needed

Monitor the progress of your ActivMoney balance and key financial goals at least quarterly. Make any needed adjustments to get back on track like increasing your automated monthly transfers or booking new ActivMoney deposits. Having frequent access to your high-interest funds allows maximum flexibility to rebalance as life changes.

Saving for multiple goals in one account

ActivMoney allows you to save for both short-term and long-term financial goals. Keep separate mental pots for different goals, rebalancing funds between them as needed. The zero-penalty access and higher returns from ActivMoney make this an ideal all-in-one savings solution for most people. With discipline, you can achieve a range of financial priorities and build greater wealth over time.

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