Are Your Savings Earning Anything?
Have you been building your emergency fund? Is that money in your account ready to take action when needed? That's a huge accomplishment! Celebrate! 👏
I have a few more questions.
Is your emergency fund separate from your everyday expense account? If not, consider opening a savings account to hold those funds. Separating these accounts is a good idea to avoid the temptation to use emergency/rainy day funds for non-emergencies.
😒My savings account earned literal pennies on the dollar for many years. It's one of those things that hurts to even think about 😢. We will not dwell on the past. I encourage you to research high-yield savings accounts. Many banks offer these accounts, and while they won't make you rich, you will be earning something on what you have sitting in savings. Interest rates have also been increasing in recent months, so you have an opportunity to get in on the fun.
Compare the image below to the one above.
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While the balances were different, the fact remains that earning 12 cents over a year is an insult. At least we see here, in just a few months, a small but more reasonable (by comparison) accumulation. Again, this interest is not a road to riches, but isn't it nice to see your account balance go up even without any addition from you? ✋ I think so!
I know you're excited, but please continue reading. There are some things to consider.
Things to Consider When Opening a High-Yield Savings Account
- Find out if there are any balance minimums.
- Look for accounts without fees.
- Check the details of the savings account.
- Do they have a maximum number of withdrawals you can make? Is that okay?
- Many are online banks; are you comfortable with that?
- Understand how to contribute and withdraw money.
- Compare rates and features.
- Keep in mind that interest earned is reportable as taxable income.