Check Your Savings Account Interest Rate

I recently checked the interest rate on my savings account and was shocked when it wasn’t what the advertised rate was. It is time to double-check your savings account interest rate!

A couple weeks ago i decided just out of the blue to check the interest rate i was getting on my savings account guys i was shocked you have got to double check the interest rate you’re getting on your savings i’ll explain why that more coming up my name is mike bernard i’m the host of the wise money sham also one of the certified financial planners right here

At corehorn financial group make sure you hit that subscribe button turn on notifications and smash that thumbs up button your action item right now i’m going to get it out of the way you’ve got to double check the interest rate that you’re getting on your savings account right now okay right right now you need to do that so we recommend individuals have a three

Bank account system and that’s the right operating system to manage your cash flow and how that works just really briefly is your immediate spending that’s bank account number one that’s your checking account and where you know how much is going in every single month direct deposit what your income sources are and then all of your regular monthly expenses okay

That can be run off of a normal monthly budget so we’ve got this much coming in we’ve got these normal monthly expenses okay that’s bucket number one that can be a checking account but then bucket number two is delayed spending and i actually have multiple savings accounts sort of represented in bucket number two maybe you can can condense it all into one but

Bucket number two is delayed spending and that’s where you’re intentionally saving money up to spend later for a specific purpose so if bucket number one was all your regular monthly expenses bucket number two are your non-monthly expenses the expenses you know are coming but they don’t happen every single month so the question is are you going to be prepared for

Them or not most people aren’t and they will either use a credit card or they’ll just sort of rob peter pay paul that sort of thing instead what you want to do is what are all of the expenses that is coming up for you some needs yep life insurance property taxes those sorts of things and then some wants vacations um a new car those sorts of things what are those

Expenses that you can foresee on the horizon and you total all those up divided by 12 and start saving that amount from that checking account or from your income saving it into that bucket number two this delayed spending and then when those expenses come up bam you’ve got the money right there you can just pull the money out and spend it okay so that’s delayed

Spending you’ve got small accounts there like so christmas or or gifts or that sort of stuff that might be a small account you could have a large account there new car like i mentioned or home improvement maybe a down payment for a house so you can use delayed spending for for you know expenses that happen every single quarter or you could use it to save up for

Expenses that won’t happen for another couple of years okay that’s delayed spending and then the third bank account is your emergency fund or cash right now guys i’m politicking to have this be the financial confidence account because when life is so uncertain and so chaotic and so volatile in the financial markets having a fully funded emergency fund gives you

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The confidence that well i can weather this storm i can i can get through this and if something happens i’ve got some reserves to fall back on that’s typically three to six months of what your lifestyle is maybe more depending on how conservative you are in your overall situation okay so that’s the backdrop of your bank account structure hopefully what it is and

That delayed spending that should be those should be savings accounts and again it could be small dollar amounts but could be larger dollar amounts if you’re saving up for a vehicle or home improvement you could have ten fifteen twenty thousand dollars represented in your delayed spending and then your emergency fund that should be a savings account as well or

Money market account so that the money that goes in hopefully you’re not using hopefully it’s not you’re not facing lots of emergency agencies and it’s there ready at your disposal but it’s able to earn some interest and here’s the thing guys i’m i’m a financial planner so i’m aware of what’s happening with interest rates and we’ve talked about it a lot on the

Wise money show and on this channel that well we’re seeing inflation come up but you’re not going to see interest rates move up you know quickly that was you know a couple years ago all right we’re starting to see loan interest rates your eyes your savings account is still going to be here and now we’ve talked about that over really the past six months since the

Fed has really been aggressive at raising the fed funds rate you’re starting to see your savings account the interest rate in your savings account go up quite a bit and i’m on tune with that okay high yield money market savings accounts are paying right now i don’t know the time you’re watching this but right now about two and a half percent somewhere somewhere

Around there and that’s what i use i use a high yield money market savings account okay and the reason why is because your savings account your savings account your emergency fund but i would also argue your delayed spending needs to meet three rules it’s got to be fdic insured and at times when everything’s great you’d say well why well just because what if you

Have an emergency at the exact same time the financial markets are having an emergency like right now you want to make sure that without the shadow of a doubt you can get your hands on that money it’s fdic insured number two it’s got to be free you’ve got i mean you shouldn’t be paying the bank to hold on to your money they’re making money off of your money that’s

How the financial system work works so it shouldn’t cost you anything to hold those those dollars in cash in that savings account and then three it’s got to be completely liquid that’s where i don’t suggest the i bonds for any emergency fund or or a a fixed a type of fixed account where you’re restricted it’s got to be liquid because you just don’t know the timing

Of an emergency so once you know it’s fdic insured it’s free and it’s liquid then go out and get the best interest rate possible in a high-yield money market savings account is typically going to pay significantly higher than what your bank savings account does all right so so let’s let’s back this up then and get back to the action item of you’ve got to double

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Check your savings account interest rate if you just have your savings account at the local bank or the credit union double check that interest rate right now okay because likely it’s paying 0.2 percent or point one percent maybe 0.3 it’s not paying that much okay but high yield money market savings accounts that you can access and get online that our fdic insured

They’re free and they’re fully liquid they are paying in that two and a half percent range okay so um that might not feel like a big deal but let’s say you’ve got 30 grand between your emergency fund and your delayed spending and for many of you it’s probably going to be more than that at 30 grand point two percent what you’re going to make 60 bucks uh a year

That’s nothing okay at two and a half percent it’s going to be 700 150 bucks a year and you might say well okay that’s not going to make me rich i know these dollars your emergency fund your savings that’s not there to make you rich it’s to keep you from going poor but that’s why it needs to be fdic insured free and liquid but while you’re while it’s just sitting

There earn as much interest as possible that’s a real difference between 60 bucks and 750 okay and that’s just on 30 grand if you’re if you’ve got a fully stocked emergency fund you’re saving up for a vehicle saving up for other things you likely are going to have more than that here’s a story that happened to me i’m very aware of all this and i bank i do all of

My savings accounts my delayed spending at an online money market it’s very flexible i’ve been using it since 2004 this exact same one so i’m talking to a client about um getting this set up and we’re looking at cd rates and we’re looking at the savings account rate and we’re talking through it and everything and and uh and and that evening i just just out of the

Blue said yeah i’m just going to double check the interest rate that i’m getting i can see their published interest rate here but let me just double check the interest rate that i’m getting so i click on my emergency fund click on account info interest rate 0.8 percent even though the published interest rate for this money market right there on their home page at

The time was 2.3 percent i was getting 0.8 and i thought well maybe my emergency fund is a different type of account let me check my home improvement fund that’s our second for our family that’s our second biggest delayed spending account and so i click on that also point a i click on all of them they’re 0.8 they’re 0.8 i end up calling i got very frustrated um

But i kept my emotions in check because it doesn’t doesn’t help to get angry but i called the the institution i said hey what’s going on here interest rate that i’m receiving is this you’re interested in your website says this what’s going on and they said well you know and it didn’t really say this but hey because you’ve been such a loyal customer all these years

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You have an old account and the old account is stuck at the old interest rates you would have to get a new account in order to get our best our best rates and again i was trying to be kind i said you’ve got to be kidding i’ve been with you guys since 2000 and four can’t you just move the money over there and they said no you actually have to open up a new account

So guys again like it’s not it’s not that this is um the difference between being able to retire at 55 or being able to retire at 65 it’s not about that it is real dollars though several hundred hundreds of dollars each year to make sure that you’re getting the most competitive and best interest rate on your money that is really just sitting there so yes i i took

Time that weekend and opened up all the new accounts and transferred the money over okay and then just to continue the story i then needed to make sure that the ownership was correct on each of on each of these accounts so when you open an account at this particular institution it only opens as an individual account you then have to add a joint owner so that was

An extra step after i opened every account and transferred the money i then needed to add the the joint owner something that easily you could forget to do or just say you know i’m frustrated i had to do this anyway i’m done right no add the joint owner because you just never know and then after that was done i added the payable on death i added my trust as the

Beneficiary so that these dollars go directly through my trust or into my trust something happens to my wife and i okay so it’s not just making sure that you’re getting the best interest but then also from a financial planning perspective make sure that the account ownership is set up correctly and you’ve got the right beneficiary so your estate plan stays intact

It’s meaningful right now guys i i don’t know how long interest how long inflation will stay high i know it’s been trending higher for a lot longer than the officials somehow expected it to be okay my guess is it’s going to be harder for inflation to drop it’s going to take a little bit longer than normal and we’re still on the upswing with interest rates now is

The time to double check what is the interest rate you’re getting on your savings account and it could be a meaningful difference to make an improvement right now work with your certified financial planner this is advice that your cfp should be giving to you and looking at all six areas of your financial life saying all right here’s how much you should have here

Are the types of bank accounts that i’ve recommend work with your cfp on that if you don’t have a cfe that’s helping you with that contact one on my team find us online corehorn.com that’s cohen with kwisemoneyshow.com you can find us there as well or send us an email info corhorn.com all right there you have it go out and take your next why step in your financial life

Transcribed from video
Check Your Savings Account Interest Rate By Wise Money Show