6 Ways to Make Your Money Work for You
We don’t know about you, but it seems like every January, we find ourselves thinking, “Loved the holidays, but boy do we need to tighten our belts!”
And we’re not just talking about how much eggnog and cookies we consumed in December.
While we can’t advise you about exercise and diet, we can give you some tips on getting your finances back in shape.
Conventional wisdom says there are two ways to end up with more money in your pocket – cut expenses or increase income, or both. But there’s actually a third – make your money work for you. And that’s where your bank can help.
1. Check your account fees.
Does your bank charge a monthly fee on your checking account? Those pesky fees can range from about $6 to $12 or more per month. Many banks offer free accounts to students, seniors and veterans, to those who keep a minimum balance, and to those who have more than one account. Also check on whether there are overdraft or insufficient funds fees, ATM fees, wire transfer fees, or excess transaction fees.
2. Keep extra cash in a savings account.
Your money will earn interest and, with online banking, it’s easy to move the funds you need from one account to another anytime 24/7. A savings account can also be used for overdraft protection.
3. Establish a money market account.
You’ll earn interest on your deposits, and it’s often equal to or more than a savings account. You’ll have easy access to your funds through check-writing, though these accounts usually limit you to six checks, transfers or other withdrawals each month. Be sure to ask about any fees for checks or if your balance goes below a certain level.
4. Invest in a certificate of deposit (CD).
If you want to grow your money faster than a savings account or money market and you have some money you can do without for a while, consider a CD. These require that you set aside some cash for a set period of time, usually six months to ten years. The money invested typically earns interest at a higher rate than a savings account.
5. Pay yourself first
Set up regular deposits from your checking account to one or more savings accounts. Your bank may even offer special rewards for this! You can set up more than one savings account to keep funds for different goals separate. Many banks offer special holiday accounts; some require an initial deposit of up to $250 and/or a minimum amount per month. Imagine having $500, $1,000 or more set aside for your holiday gift-giving budget come December!
6. Invest in a home.
Real estate is a great way to make your dollars work for you in the long term. You can buy a home, typically via a mortgage, and build equity in it over time. Your home’s value likely will appreciate over time, too. Get the best rate you can on your mortgage. A difference of just a quarter or half percent of interest can save you tens of thousands of dollars over the lifetime of your loan. Contact your local bank to get a personalized quote for a loan and research interest rates even before you start looking at properties.
Next January, we plan to feel less like tightening our financial belts and more like our money is working for us. Then we can spend more time exercising away those extra calories and less time worrying about the bills!
These tips are provided by Brentwood Bank and are for educational purposes only. Brentwood Bank makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Brentwood Bank recommends you consult a professional for any specific guidance you are seeking.