When it comes to savings, many of us have questions about the best way to put our money to work for us. This is especially true as interest rates continue to rise, offering new opportunities for long-term growth.
To help address some of these questions, we’ve compiled a list of answers featuring expert insights. From automating transactions to finding the right savings vehicle, here are the key things to know about managing your savings.
How much should I keep in my emergency fund?
Emergency savings are a great way to overcome financial challenges or unexpected costs. While the ideal amount varies from person to person, most experts agree that you should have enough savings to cover at least three to six months of expenses.
A simple way to calculate this number is by adding up the costs of necessities including housing, utilities, transportation, and groceries. This will help you estimate how much money you’ll need each month while offering flexibility to add incidental expenses such as entertainment and travel.
If you prefer to err on the side of caution, setting aside enough to cover six months of expenses (or more) can help ensure that you’re able to tackle any larger expenses that may come your way.
What’s the best way to automate my savings?
One of the easiest ways to grow your savings is by automating the amount you set aside each month. Whether you’re saving 1% or 10% of your paycheck, automatically transferring the amount to your savings account will take the guesswork out of the process and keep you from overspending.
A simple way to automate your savings is by setting up a recurring transfer between your checking and savings accounts. This can usually be done directly from your savings account and you can control the timing and frequency to create a schedule that works for you. This will allow you to track your savings growth without having to worry about moving money manually.
Should I consider opening a brokerage account?
Brokerage accounts can be a great way to grow your savings, but it’s important to note that they carry a certain level of risk. Unlike savings accounts which earn monthly interest and are considered very low risk, brokerage account balances can increase or decrease depending on your investment mix and market conditions.
A good rule of thumb when it comes to brokerage accounts is that they should not be used for short-term savings or emergency funds. Instead, consider using a brokerage account as part of your longer-term savings strategy and diversify your investments to limit risk.
How do I choose the right savings vehicle?
Choosing a savings vehicle requires a clear understanding of your financial goals and how easily you’d like to access your savings. While CDs and money market accounts can be solid options for medium and long-term savings, they also come with certain penalties if money is withdrawn early.
For maximum liquidity, a high-yield savings account is often a better option, allowing easy transfers between accounts and full access to your savings. With a current rate of 3.05% Annual Percentage Yield*, the Bask Bank Interest Savings Account lets you earn 20x the national average** while enjoying five-star service. Bask Bank’s range of services also makes it easy to build toward your savings goals with no monthly fees and no minimum balance requirements.
If you’re looking for another way to make the most of your savings, the Bask Mileage Savings Account is another solid option, earning one American Airlines AAdvantage® mile for every $1 saved annually. This can be a great way to save for upcoming travel and a nice complement to a high-yield savings account.
Establishing savings goals is one of the best ways to create financial security and address potential expenses. By taking a strategic approach and knowing your options, you can position yourself for growth while maintaining easy access to your money.
*Annual Percentage Yield is variable and subject to change.
**National average rate as of May 16, 2022 per FDIC.gov
Bask Bank and BankDirect are divisions of Texas Capital Bank. Member FDIC. The sum of your total deposits with (i) Bask Bank; (ii) BankDirect; and (iii) Texas Capital Bank are insured up to $250,000. Additional coverage may be available depending on how your assets are held.