February 6, 2023

You can earn 3%-4% on your savings account. 7 smart ways to save more in 2023

Switching your monthly payments paperless can “save more than $1,000 per year,” according to one expert.

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The #1 New Year’s financial resolution for 2023 is to boost savings, Bank of America recently reported. survey. And while creating a savings account has never been easy, many savings accounts now pay more than they have in a decade (See the highest savings rates you can get right now here). This means that at least on the interest earning side of things, you’ll be able to boost your credit easier.

Here are simple steps financial professionals say you can take to save more in 2023.

1. Open a high-yield savings account

The national average annual return, or APY, for a traditional savings account these days is 0.30%, according to the most recent Federal Deposit Insurance Corporation (FDIC) data. benefit from a A high-yield savings account is one such accounton the other hand, can advance your average APY by about 3% or more.

For those whose savings are still stuck in a low-yield bank account, now is the time to act, said Amy Hubble, principal investment advisor at Radix Financial in Oklahoma City. “Now that interest rates are up, many online savings accounts through banks like Capital One or SoFi can offer rates over 3.5%,” she said.

It’s also important to read the fine print attached to any of these accounts, says Gary Zimmerman, CEO of MaxMyInterest. “Make sure your money is held directly in your own name, in your FDIC-insured savings accounts,” says Zimmerman. “Be wary of Fintech apps or cryptocurrency platforms that promise high returns; there is often a catch.”

Another area to consider, Zimmerman adds, is fees. “If there is a monthly fee on a bank account, that’s a sign that the bank doesn’t want your business.”

2. Play it smart with this holiday bonus

With the 2022 holiday season upon us, Hubble says those who were lucky enough to have an employer offering vacation bonuses should likely use them to boost their savings account. “Make sure a portion of any rewards or gifts you receive goes toward your savings goals so that you don’t again make a commitment to start saving by this time next year.” (See the highest savings rates you can get right now here.)

3. Go beyond your employer match

The Vanguard report found the average employer match somewhere in the ballpark of 4.5%, but Hubble says that’s not necessarily enough. “Many employers will also match a portion of your contributions, but the mistake many people make is limiting their contributions to the match amount, often 3% to 5%,” Hubble says, adding that “all Americans need to save at least 10% of their contributions.” their income, no matter how old you are.”

And in 2023, maxing out your contribution for both 401(k)s and IRAs will be even more lucrative. Employees who participate in 401(k), 403(b), and most 457 plans and the federal government savings plan can contribute up to $22,500 annually, according to tax authority. That’s 2,000 more than in 2022. For IRAs, contribution limits have increased to $6,500, from $6,000.

4. Go paperless

It may be small, but it’s an easy way to save money, so we’re including it: converting bill paying to paper, says Ponyo. Everyone from cell phone companies to insurance companies to financial companies offer discounts to those who choose not to sign up for paper statements.

5. Set long term goals

Although financial markets posted significant losses in the past year, the long-term results tell a different story. Take the S&P 500 for example. Its year-to-date numbers, as measured by the SPDR S&P 500 EST Trust, also known as spy, posted a loss of 18.04% as of December 26, according to Morningstar. However, over the past 10 years, Tracker has generated an annual profit of 12.45%.

Numbers like these are why it’s so important to set long-term investment goals and not focus on short-term upheavals, says Jane Sutton, certified financial planner and managing director at Strategiere Retirement Partners, in Nashville.

“A diversified, long-term investment strategy, backed by a financial plan, is optimal for almost everyone,” Sutton says, adding that it’s also important for savers to “pay special attention to the time horizon,” and “not necessarily the time to retire.” She adds that it’s important for people to understand that “The day you plan to start the actual distribution from your accounts may be very different from your actual retirement date. This is also true for younger investors who save for shorter goals, such as a first home or kids’ college.”

6. Deal with your insurance coverage

Whether it’s medical, car, disability, homeowners, or any other type of insurance, many of us get a plan and then stick to it for years and years to come. This means that many of us overpay. Switch providers, and you may be able to save hundreds of dollars annually.

Even if you’re happy with your provider, it’s still worth looking into your coverage. “One should always look at what their current plans cover. What they get for the monthly cost,” says Nicholas Ponyo, a certified financial planner with Retirement Wealth Advisors in Berwyn, Pennsylvania.

The average 40-year-old in 2023 will spend $477 a month on health insurance, according to Money Geek Transfer. And while there’s no argument about the importance of health coverage, there is such a thing as being on the wrong plan, Ponyo says. “For example, my parents are on Medicare,” says Ponyo, adding that “the Part C plan also covers dentistry. However, they were paying $70 a month for a separate dental plan. Eliminating that extra plan saves nearly $900 a year!” ”

7. Budget planning for “fun along the way”

The most important factor when preparing a comprehensive spending plan, says Tess Ziggo, an LPL consultant, is to “create your spending plan that includes enjoying yourself today, whether that’s through travel or other things that matter to you.” She adds that “being responsible with money doesn’t mean you have to crunch pennies and just save. If you don’t have fun along the way, that defeats the purpose.”

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