New Year Savings Plan: Which Type of Account is Best For You?
December 21, 2018
By Jennifer Johnson
Are you looking for a New Year’s Resolution that’s easy to keep and helps you save for the future?
Look no further than starting a basic savings account — one of the easiest and most often overlooked ways to achieve your financial goals. A savings account is a risk-free way to take advantage of the higher interest rate environment, while taking a simple first step toward developing good financial habits.
This year, I challenge you to commit to a “Savings Contribution New Year’s Resolution.” And in this article, I’ll help you decide which type of savings account is best for helping you reach your goal:
What Type of Saver Are You?
When it comes to savings accounts, there are plenty of options to choose from — regular savings, money market accounts and certificate of deposits (CDs), just to name a few. Each one depends on what type of habits and goals you have:
First-Time Saver: “I've Never Had a Savings Account”
Never saved before? Don’t worry, there’s never a better time to start! Good savings habits start small, and at Security National Bank, you can start a Regular Statement Savings Account with as little as $50 (or, a handful of Starbucks Coffees for our caffeine addicts out there).
The nice part of “regular savings” is that the required balance is lower and the funds are “liquid” — meaning you can access your money normally without a fee. However, you should note that you can’t write checks for a regular savings account. (Remember, we’re trying to ease you into saving money — not spending it!)
HINT: If you need help getting control of your finances, try this helpful budget spreadsheet from SNB.
Security Saver: “I Want to build an Emergency fund”
Money experts like Dave Ramsey recommend that you have an emergency fund for unexpected expenses, and that it equals to three to six months' worth of your regular paychecks.
For building an emergency fund, a Money Market Savings Account is an ideal solution. You will earn a higher interest rate than you would a regular savings account, and the Money Market Account also comes with checks if you run into an emergency and need to pay a bill or two. However, you will be limited to three checks and six total transactions each month — so don’t use a Money Market Account like you would a normal checking account.
HINT: At Security National Bank, our Money Market Gold Account has a minimum opening deposit of $2,500. Click here for our current savings interest rates.
Strategic Saver: “I’m Saving Up For a Goal”
Let’s say you’re planning a vacation for next year, or saving up for a new car, but don’t necessarily know how you’re going to pay for it. Not only can you open one of the types of savings accounts we’ve already mentioned, you also have the ability set up an automatic transfer every month from your checking to your savings account, to help you reach that goal.
For example, on the first day of every month, you could choose to automatically transfer $50 to your savings — before you ever even know what you missed! You can set up automatic savings transfers with SNB through online banking or by setting up an appointment with a personal banker.
HINT: Use our handy savings goal calculator to see how close you are to your savings goal.
Rock-Star Saver: “Savings is a Way of Life For Me”
If savings is a way of life for you, a Certificate of Deposit (CD) is a great way to put your money to work for you — as long as you don't need to access your funds right away!
With a CD, you earn higher interest than a normal savings account. Here's the catch: you won’t be able to take your money out of the CD for a certain amount of time without paying a penalty to the bank, depending on the type (or length) of CD that you you choose. When the 6-month, 1-year or 5-year term is up, you’ll have made a nice amount of interest on your deposit — and you can decide whether to renew your CD or make any changes to it.
HINT: At SNB, the minimum amount to open a CD s $1,000 and terms range from 91 Days to 60 Months. You can even apply online for a 30-month CD in just a few minutes.
Do You Need Help Finding the Best Savings Account for You?
At Security National Bank, we’re here to help you find the right savings plan for you. Give us a call or set up an appointment with a personal banker today to get started.
Remember, you can always start in one type of savings account and switch to another type of savings account. Or, you can build up one savings account and then open another savings account for something else. The important thing is that you are developing good savings habits for down the road in the New Year and beyond!
Image Credits: via GIPHY