Checking accounts are the core relationship that an individual has with their financial institution and, there are now many checking options that offer improved returns and benefits. However, it is also an excellent time to start looking at opportunities outside of traditional checking accounts for earnings. Currently, Certificates of Deposit (CDs) have very favorable rates and terms. CDs can also be a great option for individuals who are on a fixed income and looking to grow their savings as well as for people who are seeking to build up their savings faster.
Regardless of rates, however, saving and preparing for the future is always important.
Consider the following:
- According to a Bankrate survey:
- Half of Americans are struggling to save.
- Only 43% said they could cover an emergency of $1,000 or more using funds from their savings account.
- 68% of U.S. adults are worried they will not be able to cover their living expenses for one month if they lose their primary source of income tomorrow.
- Multiple studies show that poor financial wellness leads to high stress and poor overall health.
What should an individual do?
- Create a personal budget that:
- Sets aside savings first. Even small amounts add up over time.
- Contributes to savings on a regular and consistent basis.
- Creates a rainy-day fund, covering three to six months of living expenses.
- Includes an emergency fund that can cover unexpected needs like a car repair or medical expenses.
- Puts away money for a family vacation.
- Don’t get discouraged. Keep trying. Good habits take time and persistence.
Where should funds be placed?
- FDIC-insured bank products are a good choice for safety and security.
- Consider a CD. Some interest rates on CDs are at fifteen-year highs. However, individuals can be hesitant to place funds in a CD, fearing they may need their money before a CD matures. A good strategy can be to purchase multiple CDs with staggered maturity dates, providing accessible funds on a consistent basis.
- If an individual has already established their rainy-day fund and emergency fund, in addition to looking at CDs, they should consider investing in stocks, bonds, or mutual funds. It is important to save safely and then look to other opportunities based on individual risk tolerance.
Don’t wait to get started. Beginning to save early can make a big difference in a person’s financial well-being. Make saving a priority and don’t give up. Financial success and preparedness can help lead to overall physical and mental health. And, when questions or issues arise, seek trusted financial institution professionals. They can help.