Get Wise With Your Banking Strategy To Boost Your Finances

Finance


Margaret Burnett

5 smart ways to bank and save

This article is reprinted with permission from NerdWallet.

Wondering how savvy you are with your bank account? Brush up on how to grow your savings balance and become smarter about your banking strategy. Here are five actions you can start today.

1. Overcome Account Anxiety

When was the last time you saw your bank statement? If it’s been a while, you are not alone. Omari Hall of Greenpath Financial Wellness, a nonprofit based in Farmington Hills, Michigan, says it’s common for people to ignore their spending and savings.

“Looking at your accounts and balances can make you feel uneasy,” says Hall. Or maybe it’s the familiar feeling of disappointment when you want to buy something but see the funds aren’t there.

But looking at your account also gives you data, which can be useful, he says.

“It’s easier to decide what to do with your money when you have the data in front of you,” says Hall. For example, if you find yourself using an expensive food delivery service several times a week, it may prompt you to plan a few home-cooked meals instead. This is especially true when calculating

2. Aim for preservation consistency

Part of being a savvy saver means setting aside money for an emergency fund. It’s good to have cash to spare. Ideally, from three months he’ll have enough to cover six months’ expenses, but that amount is unrealistic for many people, says Hall.

If you’re increasing your savings, Hall suggests having a consistent goal rather than a specific amount. For example, get paid weekly and for each paycheck he sets up a $10 automatic savings account. This consistent savings could net him over $500 a year later. It can go a long way toward paying for emergency expenses.

Read more: 6 steps to get your emergency fund started

3. Maximize Account Yield

From the first $1 you save, you’ll want to put it into a high-yield account. The more interest you earn, the faster your balance will grow over time. Also, interest rates on savings accounts today are higher than they have been in years.

Let’s say you put $1,000 into your savings account (for example, you saved $500 and received an additional $500 as a tax refund).

If you keep your money in a savings account that only yields 0.10% annually, after a year you’ll only earn $1 in interest. But when he puts that money into a high-yield savings account that pays her APY of 4%, the funds increase by $41 over that period. Without any further effort, he would have $40 more than if he had kept the money in a low-interest account.

There are also checking accounts that allow you to earn high yields on your balance. You may have to jump through a few hoops, like making a certain number of debit card transactions each month, for example, but if you find something that works the way banks do, you’ll be more than happy with both your checking and savings accounts. You may earn high yields. .

See also: What is the right amount to put on a CD? Here’s how to figure it out

4. Eliminate fees

If you have a bank account that charges a monthly fee of $5, you are paying the bank about $60 a year. Some institutions may charge more than that. Choose an account that waives this fee, which is easier to meet the requirements, or better yet, a free account that charges no maintenance fees at all.

Also, look for a checking account with low or no overdraft fees. Many financial institutions have reduced these penalties or eliminated overdraft fees.

Read: How women can become more financially literate and manage their money

5. Learn About Federal Insurance

Many of the accounts offering the highest yields are online only. If you have never opened an account with online banking, you may be wondering if online banking is safe. However, if your account is at a bank that has federal insurance through Federal Deposit Insurance Corp. or a financial technology company affiliated with a bank that has federal insurance, your money is protected. For credit unions, this funding is insured by the federal government through the National Credit Union Administration.

According to the FDIC, “The standard amount for deposit insurance is $250,000 per depositor, per insured bank, and per account ownership category.” (Examples of ownership classes are joint and single accounts.) And, according to the NCUA, their standard insurance amounts are the same.

This means that even if your financial institution fails, you will still have access to your money up to the insured amount. However, before depositing money with an institution, check its policies and make sure the funds are insured by the federal government.

Read more: Is the deposit insurance system broken? 9 things to know about how bank accounts are covered and how the system could change

Banking smarter doesn’t have to be a huge effort. These 5 suggestions can improve your banking knowledge and bank balance.

Learn more about NerdWallet

Margaret Burnett writes for NerdWallet. Email: mburnette@nerdwallet.com. Twitter: @Margaret.

– Margaret Burnett

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04-22-23 1321ET

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