Creating a savings strategy is one of the most important things you can do to establish financial security. Whether you are just getting started or have been saving for a long time, having a well-thought-out plan can make a significant difference.
Setting Achievable Savings Goals
A great way to maximize your savings is to set specific goals. These goals can be more general (like building an emergency fund) or more specific (like saving enough for a down payment on a house).
When setting your goals, it’s helpful to ask yourself a few questions:
- What are your major financial priorities?
- Do you have an emergency fund that can cover unexpected expenses?
- Do you need your savings to be easily accessible?
Your answers to these questions will help you identify your needs and create appropriate savings goals. Once you have established your main priorities, we recommend determining the amount you wish to save to achieve those goals.
Focusing on Improving Your Savings
Although interest rates are expected to rise gradually over the coming years, it’s important to note that this will happen slowly. Focusing on long-term growth can be an effective way to develop your savings strategy while achieving your savings goals.
Where you keep your savings can also affect how those savings grow over time. Common options include traditional savings accounts, high-yield savings accounts, certificates of deposit (CDs), and brokerage accounts. While each has its advantages, some also come with drawbacks, including higher risk levels and lack of liquidity.
Here are some key things to know about each type of account:
- Traditional savings accounts: Traditional savings accounts are often the first choice, as they provide a reliable way to grow savings at a moderate interest rate.
- High-yield savings accounts: High-yield savings accounts offer a safe way to grow savings and typically provide a significantly higher interest rate. These types of accounts can be found through traditional banks and online banking, offering strong returns as well as ease of access. It’s worth noting that high-yield savings accounts may also come with fees and may require a minimum balance, so it’s essential to review your options if you decide to open such an account.
- Certificates of deposit (CDs): With slightly higher interest rates, CDs can be a good option for those interested in long-term vehicles. Typical terms range from six months to 18 months, although longer terms are also available. However, it’s important to note that CDs have lower liquidity and carry penalties for early withdrawals.
- Brokerage accounts: For those looking for more long-term options, brokerage accounts provide a means to access a range of investment options including stocks, bonds, and mutual funds. While this type of investing often carries higher returns, it also comes with a higher level of risk, and accessing funds can be challenging if market timing isn’t done correctly.
Choose a Saving Method Suitable for You
Depending on your circumstances, one type of savings option is likely to better suit your needs than others. If you have a longer time frame, a brokerage account or a CD could be good options. If you are looking for easy access to your money or want to mitigate the risks associated with investing, a high-yield savings account often provides more benefits.
When
Choosing a high-yield savings account, it is important to consider both the interest rate and the institution offering it. With a competitive interest rate of 5.00% annually and the ability to open an account in minutes, the Bask Bank savings account is a great option. There is also no minimum balance requirement and no monthly fees for the account. Additionally, there is no limit on the amount you can earn in interest, so the more you save, the more you earn.
If you’re interested in other ways to maximize your savings, Bask Bank also offers the Bask Mileage Savings account which earns 2.5 miles from American Airlines AAdvantage® for every dollar saved annually. It also makes it easy to smoothly transfer funds between the two accounts so you can earn interest while also earning miles to use for upcoming travel costs.
Overall, maximizing your savings requires a cautious approach. By clearly understanding your needs and focusing on long-term growth, you can achieve your goals and increase your financial security.
The annual percentage yield (APY) is accurate as of July 31, 2023. APY is subject to change at any time without notice. There are no monthly account fees or minimum balance requirements. It must be funded within 15 business days of opening the account.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
CNBC, “Fed Chair Powell says rate hikes, tighter policy will be needed to control inflation,” https://www.cnbc.com/2022/01/11/powell-says-rate-hikes-tighter-policy-will-be-needed-to-control-inflation.html.
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