Sponsored by JPMorganChase
By Aaron Allen, The Portland Medium
Saving money is crucial, and establishing a habit enhances our ability to save, leading to a financial cushion for future expenses. However, saving is neither simple nor easy, especially with the rising costs of everyday products due to recent inflation. Quincy Crawford, Branch Manager for JPMorgan Chase, acknowledges that “simply suggesting cutting back on small indulgences can be irritating.”
Thankfully, Crawford shares several options to help make saving money a habit, equipping us better for the unexpected and the future. Before determining how much to start saving, it’s important to understand money coming in and money going out, such as rent, food, transportation, utilities, and subscription services. Apps can help track these recurring expenses, providing an opportunity to reconsider or renegotiate them.
“Once you’ve understood your monthly budget, check what’s remaining to determine a doable amount to start setting aside each month,” says Crawford. “There are various saving strategies, from keeping a certain amount in your bank account each week to automating transfers from your checking to your savings account each month. You can also save for something specific, like a vacation, home project, or a splurge you’ve had your eye on for a while. Here are a few saving account options to consider.”
Standard Savings Accounts are the most common, easy to access, and typically open. These accounts can often be managed online or through the bank’s mobile app, which simplifies things.
“Savings accounts can often be accessed and managed online or through the bank’s mobile app, which can make things easier,” says Crawford. “Before choosing an account that best suits your needs, ask if there is a monthly service fee and potential ways to waive the fee.”
Money Market Accounts are similar to savings accounts but offer higher interest rates, although they usually require a minimum balance.
“These are similar to the savings accounts,” says Crawford. “Customer receives more interest right on their money something that does vary from bank to bank and they usually will require a minimum balance.”
“I can tell you that that the money market account is something that is very popular,” continued Crawford. “But any time you sit with a banker, that’s where you cover all the options that we would have, right? So, for example, if someone comes into a chase bank branch then they’re going to be able to find out the different amounts that may be available in order to start that money market account.”
High-Yield Savings Accounts and Certificates of Deposit (CDs) are increasingly popular. High-yield savings accounts function like typical savings accounts but may have transaction limits and minimum balance requirements. They are also protected up to $250,000 at FDIC-insured banks. CDs offer higher interest rates and are suitable for short-term savings goals.
“CDs are highly sought after when interest rates are favorable,” says Crawford. “However, you must commit to leaving the money deposited for the agreed term, which can span from months to years. They are useful for goals like a down payment on a house or a car.”
High-yield savings accounts are particularly appealing in a low-interest-rate environment, as they offer better returns compared to standard savings accounts. They are perfect for those who want to maximize their earnings without exposing their savings to the risks of the stock market. On the other hand, CDs require a more significant commitment since the money must remain untouched for the duration of the term. The interest rates for CDs are typically higher than those of high-yield savings accounts, making them an excellent choice for specific short-term goals.
Long-Term Accounts provide an opportunity to accumulate returns over years, depending on market fluctuations.
“These accounts are designed for a specific financial goal,” says Crawford. “And they also possess tax advantages. I suggest you consult your financial institution for long-term savings account options.”
Some options include:
• 529 Plans: Saving for a child’s education with tax-deferred benefits. These plans are designed to help families set aside funds for future educational expenses. The contributions grow tax-free, and withdrawals are tax-free when used for qualified education expenses.
• 401(k): Employer-offered retirement savings accounts with monthly contributions. Employees can contribute a portion of their salary, which is often matched by the employer to some extent. These accounts benefit from tax deferral, meaning the contributions are made pre-tax, reducing taxable income.
• IRA: Individual Retirement Accounts offering personal retirement savings options. There are various types of IRAs, such as Traditional IRAs and Roth IRAs. Contributions to Traditional IRAs may be tax-deductible, and earnings grow tax-deferred until withdrawal. Roth IRAs are funded with after-tax dollars, but withdrawals are tax-free in retirement.
When considering savings options, it’s essential to ask your bank or financial advisor about any monthly deposit or balance minimums, or additional requirements or fees. For more budgeting and savings tips, visit chase.com/financialgoals.
“There are many people to speak with who can walk you through the options patiently, explaining how much you may accumulate over time,” Crawford concludes. “It’s really beneficial to sit down with someone and gain that insight.”
