I show you how to save money without sacrificing what you enjoy, budget for the future without feeling restricted, develop healthier financial habits that set you up for success, and use financial resources to help you meet your goals.
This might seem like an odd question. You can never have too much in savings, right?
Let me clarify. I mean, do you have too much in your savings account? Is that amount earning 1% in interest when you could be investing it and earning much more?
Personal finances are just that – personal. But make sure you are not taking the easy way out by leaving your money in a low-interest savings account.
Consider allocating your funds across different accounts to maximize your earnings potential.
Experts recommend saving anywhere from 3 months to 12 months of living expenses in the e-fund. Generally, you want your e-fund to be easily accessible. This usually means keeping it in a savings account or money market account earning a small interest.
Monitor your e-fund so that you only have what you need in there. For example, if my e-fund is fully-funded at $25k, I will transfer anything above that into another account. On the flip side, if I withdraw from my e-fund, I will have to deposit funds to bring the balance back up to $25k.
Specified Savings Goal
This is your savings account for a shorter-term goal – house down payment, vacation, new car, etc. Since these funds are earmarked for a specific purpose and timeframe, you want to put them in a low-risk account, such as a savings account.
Personally, those are the only two savings accounts I have (for now). Eventually, I will have accounts to save for my future children’s college fund. I make sure that I never have more than the intended amount in either account. Because if I do, it probably means that money isn’t earning as much as it could. In other words, my money is not working for me.
Anything that isn’t in a savings account should be in some type of retirement account. Max out your IRAs and 401Ks. Invest other funds in a taxable account. Are investment properties a part of your retirement plan? Because these are somewhat riskier options, the yield on your investments will be much greater than with a savings account.
Again, finances are personal and unique to each individual/family. What works for me may not work for you. However, I hope it was interesting to read about how my family treats savings accounts.
How many savings accounts do you have? Do you have “too much” in savings?
By empowering women to understand their finances, I free them from uncertainty, stress, and fear. My clients go from scared to savvy — transforming into the confident Chief Financial Officer for their family. You can do the same! Get out of debt, save for the future, and splurge on what you want.