Five Winning Ways to Grow Your Savings Account

Make Saving Part of Your Routine

There are plenty of reasons to open a savings account: To build an emergency fund, to prepare for a major purchase, to earn additional interest and to lay a foundation for your long-term financial stability.

However, opening a savings account is just the first step in smart money management.

Whether you're worried about rising bank fees or concerned about your own spending habits, there are a number of hurdles to climb as you put your money on the path toward saving. If you are hoping to empower your personal finances, here are five ways to grow your savings account balance, cut your costs and avoid unnecessary bank fees.

Watch Your Spending

Saving more starts with spending less. If you are struggling to contribute more to your savings account, many banks and personal finance sites offer free online tools for tracking your expenses.

"Most people who buy small items every day aren't aware of how quickly these small purchases add up," says Aaron Forth, vice president and general manager of Intuit Personal Finance Group. "Realizing how much you spend in certain areas encourages you to make changes like not eating out or shopping less regularly."

For account holders who are just beginning to understand the importance of a budget, Greg McBride, CFA and senior financial analyst, says monitoring expenses ultimately leads to more saving.

"By holding yourself accountable to your spending, you'll give yourself further opportunities to save," McBride says.

Forth says that saving can make a big difference down the road. "While it is important to manage everyday spending, it's also important to save up for long-term goals like retirement, education or buying a home," he says.

Automate Your Savings

"The biggest barrier to saving is failing to be in the habit of saving," McBride says. "The best way to establish that habit is to pay yourself first."

McBride says that automatically depositing a portion of your paycheck into a savings account or arranging monthly transfers from a checking account is the easiest way to get into a routine that adds to your balance.

For those who find big monthly transfers overwhelming, some banks have begun offering automated savings programs for account holders who also have checking accounts. With each purchase made with a checking account debit card, the bank will automatically transfer a small amount from checking into a linked savings account.

Let's say you buy a cup of coffee for $1.50 with your debit card. The bank might transfer 50 cents to your savings account at the same time. It's a simple reminder to save while you spend.

Avoid Excessive Withdrawals

While you may be used to making plenty of transactions with your checking account, the federal government discourages the same type of behavior with a savings account.

Federal Regulation D limits the number of certain types of transfers or withdrawals from savings and money market accounts to six each month. Ally Bank spokeswoman Beth Coggins says this limit applies to electronic, phone or check transactions.

After an account holder crosses the threshold, banks can impose excessive withdrawal fees. These fees vary among institutions, and some account holders may pay up to $10 for each additional transaction.

"In this low interest-rate environment, incurring an excessive withdrawal fee just once can wipe out many months of accrued interest," McBride says.

Keep a Close Eye on Your Balance

As more banks begin to adjust their business models in the wake of new financial regulation, McBride says that account holders will need to pay close attention to their account terms, particularly minimum balance requirements.

"A higher minimum balance requirement is a stealth-fee increase," McBride says. "Many account holders will not be able to maintain that balance and will begin to incur new fees."

Technology is helping consumers avoid those bank fees. Forth says that monitoring balances is getting much easier as more consumers adopt smartphones and tablets to use money management tools on the go.

Knowing how much is in your savings account can help you earn more money, too. McBride says that account holders who can maintain even bigger balances can often qualify for increased savings rates.

"Utilizing free email or text account alerts can help to ensure you are taking advantage of the ability to maximize your earning potential," McBride says.

Enroll in Cheap Overdraft Protection

Your savings account can also be your checking account's best friend and help to avoid high overdraft fees.

According to the Bankrate 2011 Checking Account Survey, the average overdraft fee rose to $30.83. However, you can pay much less should you have insufficient funds by maintaining a savings account with the same bank. McBride says that the typical fee for savings account protection is $10 per incident.

"Having a link between your checking and savings accounts is your lowest-cost line of defense against overdrafts," McBride says. "In the event of overdrawing your account, this is a matter of moving your money from one account to another instead of borrowing from the bank."

However, don't expect your bank to automatically enroll you in the affordable savings account safeguard.

Because traditional overdraft coverage generates bigger profits for banks, McBride advises that account holders should specifically request a link between their savings account and checking account.