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Getting in the habit of saving money is important, as it helps lead to creating a financial cushion to cover future expenses. Saving is not easy, especially when everyday products are at an all-time high given recent years’ rising inflation and simply suggesting cutting back on small indulgences can be irritating.
Thankfully, there are options to help saving money become more of a habit to better equip you for life’s unexpected needs. Before determining how much to start saving, first understand money coming in and money coming out – like cost of rent, food, car or public transportation, utilities, and other direct payment expenses, such as subscriptions to various streaming services. Apps can help track these recurring expenses, making it a good time to reconsider or renegotiate them.
Once you’ve understood your monthly budget, check what’s remaining to determine a doable amount to start setting aside each month. When it comes to saving, there are various strategies, from keeping a certain amount in your bank account each week, to automating transferring money from your checking to your savings account each month. You can also save for something specific, like a vacation, home project, or a splurge you’ve had your eye on for a while. Here are a few saving account options to consider:
Standard Saving Accounts are the most common, easy to access and typically open. Savings accounts can often be accessed and managed online or through the bank’s mobile app, which can make things easier. Before choosing an account that best suits your needs, ask if there is a monthly service fee and potential ways to waive the fee.
Money Market Accounts are similar to savings accounts, but the customer receives more interest on their money, something that varies with banks. They usually require a minimum balance.
High Yield Savings Accounts are increasingly popular, often coming with higher interest rates, making them suitable for short-term savings goals. They work a lot like the typical savings account, allowing for deposits and withdrawals, but there may be transaction limits and minimum balance requirements. They are also protected up to $250,000 at FDIC insured banks.
Certificates of Deposit (CDs) are highly sought after when interest rates are favorable, but you must commit to leaving the money deposited in the CD untouched for the agreed upon term, which is usually months or years. There may be minimum deposit requirements, but they offer returns so are useful for short-term goals, such as the down payment on a house or car.
Long-Term Accounts provide an opportunity to accumulate returns over years, depending on how the markets fluctuate. These accounts are designed for a specific financial goal and have tax advantages. Consult your financial institution for long-term savings account options, some of which may include:
– 529 Plans: Saving over the years to pay for the education of a child, grandchild, or niece/nephew. Savings are tax-deferred and can only be used for the beneficiary’s education, whether for college or another educational institution.
– 401(k): Retirement savings accounts your employer offers. Contributions are usually made monthly (a percentage of the salary) via direct deposit. There are limits to how much you can contribute.
– IRA: There are various types of individual retirement Accounts (IRAs), offering another personal retirement savings option. Contributions are limited, not necessarily offered by an employer, and like the 401(k), they are only used after retirement.
Be sure to ask your bank or financial advisor whether the account you plan to open has a monthly deposit or balance minimum, or any additional requirements or fees. For more budgeting and savings tips, visit chase.com/financialgoals.
For informational/educational purposes only: Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy.
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