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#201 – Savings Account Are On Fire
Episode 20113th September 2023 • Money Boss Parent • Anna Sergunina
00:00:00 00:16:40

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Remember when savings accounts felt almost irrelevant? Well, those days are gone. Interest rates have climbed, and now even simple savings accounts can earn you a decent return.

Today we're talking about what your savings account could mean for your financial goals --- and the exciting part? Your emergency fund can actually make money for you now.

Be proactive, check out the options, and let's make your money truly work for you.

Anna's Takeaways:

  • Understanding The Importance Of Having A Savings Account (1:31)
  • Where To Start With Your Savings? (4:28)
  • High Yield Savings Accounts Are Paying Over 5% Interest (6:00)
  • How To Choose A Savings Account (9:26)

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 Money Boss Parents! Welcome to Anna's Money Boss Parent podcast, your go-to resource for mastering money management while raising a family. Join me as we explore practical tips, expert insights, and inspiring stories to help you achieve financial success and create a brighter future for your loved ones. Don't forget to subscribe, rate, and review the show to support our mission of empowering parents like you to take charge of their finances and build a prosperous life for their families. Let's thrive together on this incredible journey!

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Article - High Yield Savings Accounts are offering around 5%. How long will this last?

CIT Bank -5.05%

Vio Bank High Yield Online Money Market Savings - 5.25%

Synchrony High Yield Savings - 4.5% - 4.25%


Anna Sergunina:

Hey money boss, parents, Anna's here. And welcome back to the money boss, parent podcast. I am excited to chat with you today because something has really been catching my eye. And I cannot tell you enough. How many conversations I've had with clients over the last probably five months, six months, I

Anna Sergunina:

think would be a fair summary of this conversation. And so what I want to focus on today are savings accounts. I know for the for the longest time, it was as long as probably 2008 2009. Since the last recession we had in this country, conversation around savings accounts didn't really happen as much because we were not making as much interest on those accounts as we're we're today. And so for most of people out there were like, Yeah, my big bank is paying me point. Oh, 1%. So why do I even want to bother with thinking about that. But things have changed. And that's why my conversation, which is pretty much the same with clients has been lately, asking a question that I want you to think about today is how is your savings account doing today? Okay, because I don't want you to continue dismissing this, this question as things have changed. And guess what now, and probably for a while going forward, we're gonna make a pretty decent return in a simple savings account. So let's dive in a little bit to talk about where and how you can do this stuff. And what are some of the implications of having a savings account. Now, of course, for those of you who have been here for a while, and you've heard my conversations around, having multiple accounts to support your various financial goals, they can be all in the same bank doesn't have to be, you know, across the board. But we're not talking today about the structure that we're talking about, you know, what that savings account would be used for. And what I'm referring to here are financial goals that you planning on will be needing funds for in the next three years. Now, three years seems like a long time, especially when you're a parent like me, you have young kids, and like the time concept is so different. But money is a little bit different in that regard, and what is happening, and landscape of your money is growing. And that's why I'm beating the drums today is we need to take a look at your savings account. So that three year timeline is actually not a very long timeline. So I want you to make a list of what are you going to need the money for in that next three years? Or have you struggling with that think about next 12 months, okay, if you have that list, you probably could come up with dollars attached to every need, or every financial year goal you have on that list. Amongst those goals, you probably should be checking off a box for having a solid emergency fund. If you haven't really worked on that yet. Let's regroup and guess what now and more than ever, I'm really excited about how our emergency funds are actually making money for us because again, for the last decade or more, they haven't given us much return as as rates were low, right? Everybody's today talking about how mortgage rates are so high. Well guess guess what, my friends, it is definitely true. The mortgage rates are increased in their all time high. But the same, the same could be said about what we earning in our simple savings accounts. Now, there are variations of how the savings accounts are their safe, high yield savings accounts. There's money market savings accounts, and so forth. I'll link a few notes in the show notes, a few articles that talk about what the difference are and how you can kind of go about deciding. But I just wanted to start with the basics. So on our on our list of short term goals, we have things we need to fund and among those is our emergency fund. And then whatever else that you maybe you're going to be buying a car, I had a client earlier this morning reached out their lease is running out and they need to buy a car. So that's a good example of needing to have either you know enough money for a down payment or if you're going to be buying that car for cash. That's a good example. Now next, I want you to open your bank, login into your bank. If you have if you have an app like I do on my phone, I talk a lot about mint. That's a good place to start with just go to your to your brand also open up a bank and login. Most of people out there and I think it will apply to you as well have a savings account that's typically attached to your checking account or you get some kind of a deal that the openness checking account, the, you know, the savings account is going to do some magic for you, I want you to look at that account. And tell me, right, you can send me a note and tell me what kind of Raider you're actually earning on that savings account. And I bet that for most of you, if you're banking with big financial institutions, like Bank of America, Chase, Wells Fargo, you probably aren't earning as much interest as you think you have. And that's okay. Because that's typically right what has happened over the last decade. And so I looked up some statistics and average savings account at those big financial institutions is lingering just about point four 3%. According to FDIC, Insurance Corporation, Federal Deposit Insurance Corporation now high yield savings accounts are paying over 5%. There's your drop, there's the bomb that I wanted to drop for you today. Yes, my friends, it is over 5%. So if you're staring at your screen, and it looks like you're getting, hey, it's less than 1%, or whatever decimal points of that we need to run we need to run and find other alternatives. The reason I'm talking about this today is because for I guess, um, I don't have a crystal ball, it's hard to predict what's going to be happening, but probably for some time. And even if you really think about this for the next 12 months, whatever sum of money you have in that savings account, you've moved it over and it's starting paying you 5% a year. What would that look like for your finances overall? So I want you to start thinking about that and to start telling all your friends and family and whoever it is, you know, that they need to reevaluate what their options are, in terms of what their savings accounts are. I also wanted to highlight for you. And I will give you in just a bit a couple of examples of banks that we have actually vetted here at Mainstreet financial planning and recommend to our clients so you can check those out. But I also wanted to highlight for you that while it may seem a little bit cumbersome to have to, like, move things around and have to open a new account, it is probably worth worth your while. So don't don't get discouraged. But just like oh gosh, one more thing I have to do. So here are a couple of banks that I want you to check out. And I'll include some more in the show notes as well, cit bank, so it's C i And right now, they're probably the highest on my list. They are paying 5.05%. And it's called CIT bank savings platinum account. Now I know that one of the things you should be paying attention to not just how much percent you're going to get right on on on the deposits you're going to make with that bank. But also whether it has what is really important, right, because of the recent failures with a few regional banks that everybody heard about to make sure they have FDIC insurance, right. So and those are the accounts that I have vetted or banks that I have vetted myself. So but still, anytime you come across because you can start Googling right now, you know, where is the highest interest rate I can get on my savings, things can come up in front of you. So I just want you to be educated consumer. It's actually a bank that's owned by first citizen, it's a big national bank. And so cits like subsidiary of them, for the savings account I mentioned. They want a $5,000 minimum deposit. And that's another kind of a thing to be on the lookout for nothing wrong with that. Sometimes they would, you know, lure you in with the promotional rates of like something a little bit more. Other banks will say, Well, you know, we'll do we will pay you a higher rate if you, you know, get get us, you know, a higher deposit to open an account, so not to worry, but amongst those other banks. I personally still bank with And jumping over hurdles, right to open more savings accounts is something that I haven't gotten around to, but I'm beating the drums for all of you. So that's a bank that pays about 4.75% American Express high yield savings accounts, Barclays Bank, Capital One 360 Those are like go to places right now where you can pick up close to 5% and some of them are yielding you over 5% So my friends as I as I close on the shorter episode Optis newly released my new boss parent podcast, which I'm excited and I hope you are excited as well. I want us to think about what are what are the smart decisions or steps, we can start taking with our money. And as simple as this is, I swear to you,

Anna Sergunina:

if I had to pull up my client list, every client that I had to had come in contact with this, this year so far for the last six months, had to make a change, and how to really look reality. And I'm so like, oh my gosh, I didn't mean think that the cash that I had for emergency funds or short term goals, at a bank that I've been with for a long time, is not paying me much of anything. Now, some of you, this is like a side note, because I am in no shoes. Some of you may have had already, these accounts that are paying, you know, more of the market rate versus like the big banks. And so you might be thinking like, Well, I'm just like, just like you Anna had accounts I have I've had mine for a while and ally? And is it worth the move for this, you know, difference in percentage there I'm going to get. So that's something that I leave up to you to evaluate. If you do have a substantial sum of money, that's probably going to make a significant difference, right? If you're going to shift that counts, as well. But something else I've I've kind of observed and learned is that over time, and because we've had interest rate increases, right? So it's like the rising tide lifts, right, well rises, all ships. So as things that start to rise, everything else starts to rise at the same time, right, or maybe takes a little bit longer. If we still expect that interest rates are going to continue rising, it's not only going to impact the mortgage rates, it's also still gonna give us some whatever greater return on our savings account. The only thing that's different is that some banks are taking their sweet time to pay you more interest. And that's why I wanted I wanted to point out to you today that you have options, and you can make those shifts, but the decision whether to you know, you go from account that pays 4% to a bank that pays 5% Is is up to you, if it's going to make that significant change. So I'm hopeful that we're gonna get these rates increased across the board over you know, over time. And yeah, back to the times when these online savings accounts or high yield savings accounts were were popular, which was like in early in 2008 2009. And so I'm kind of, I'm kind of excited for that. Let me know what questions you have and if you need any additional information of what banks to look for, but I'll put I'll put some ideas for you in the show notes. And until the next time remember you are the bosses of your own money.