Maximizing Your Savings Account Plan
by Ramona Morel, Director October 3, 2019
Ramona Morel is the Director of the Justice Center’s Consumer Bankruptcy Project.
Though October is known for Halloween, it’s also National Financial Planning month. As the Project Director of the Consumer Bankruptcy Project at the City Bar Justice Center, I can tell you from experience that putting some money aside in savings is a great start to financial stability. Increasing your savings account for a rainy day, an emergency, or to fulfill one of your short or long term goals is very important but can be difficult for low and middle income households struggling with household or medical expenses, medical and educational or consumer debt. If you have a savings plan as part of your financial planning strategy, one of the best ways to build a healthy financial future is to maximize your savings account. Here are a few tricks that will lead to some nice financial treats in the future no matter your budget.
- Pay yourself first.
- Open a “savings plan” bank account. A savings plan bank account is one that is separate and apart from other accounts or money that is used to pay for household expenses and everyday purchases. The money going into this account should be used for your short-term or long-term financial goals.
- When you open the account, whether it is at a physical bank or online, make sure you’re opening one with a FDIC insured bank. If you open the account with the same bank you have your other accounts with, make sure not to link those accounts with this savings plan one. Having a savings account separate from your other accounts will ensure that you do not easily access the funds in it.
- Revisit your finances.
- Take some time to review finances by creating a budget sheet to list your income and track your expenses. Many banks offer online budgeting tools that can help you track what you spend your money on.
- Find ways to lower the cost of everyday spending by cutting back on purchases, using coupons and shopping around for sales and discounts.
- Figure out need versus want. Look to see where you’re overspending or purchasing items, goods and services that you want but are not necessary.
- These steps will yield extra savings, which you should automatically deposit into your separate savings account.
- Make sure you’re getting the most out of your bank accounts.
- Many banks charge banking fees for opening a checking or savings accounts. These fees can be as little as $5 or as high as $25 a month. Shop around for banks that offer checking or savings accounts with no fees and minimum balances.
- While you’re shopping around for banks that do not charge fees, also take the time to shop around for banks that offer high interest rates on opening a savings account. The interest earned on the account will be an extra savings but will also be income that is reportable on your taxes.
- Banks have cash back rewards programs for using your debit card at certain retail stores. Set up these cash back rewards to be automatically deposited into your savings plan account.
- Set up automatic deductions from your paycheck.
- Setting up a savings account plan and maximizing it doesn’t have to break the bank.
- Start small and build up over time. Having $10 automatically deducted from your paycheck and deposited into your savings plan account can add up to $240 in one year.
- Turns coins into cash.
- Don’t ignore those pennies, nickels and dimes. Every time you receive change back in form of coins, put them into a large empty jar. At the end of the year, roll those coins neatly into coin wrappers and take them to the bank. You’ll be surprised how much you can rack up.
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