Financial Tip Of The Month- September 2019

For my initial financial tip of the month I want to explore the relationship between savings and checking accounts. If you are like most people, the bulk of your income goes into your checking account, and it stays there to carry you through the month, and you place what is left into savings at some point before the next payday. Managing your accounts like this might be costing you money, especially in the digital age when all it takes is a few taps on the screen and money can be moved almost instantaneously from one account to another. If you want to maximize what your money can do for you, then the bulk of your money should always be in your savings. Even if your savings account earns the current national average interest rate of 0.09%, that is higher than the 0% interest your checking account is earning. This is especially true if your bank uses daily balance averages to calculate the interest paid. To maximize your interest earnings, you have to keep more money in your savings account for longer periods. But what about paying bills and spending money? That is easily handled by logging onto your online account or your app each morning and moving over what you might need for the day. If you pay all bills typically once a month, I would recommend moving the needed funds into checking a day or two ahead of the date you will be paying bills, and if it is typically right after payday, then let your salary be deposited into your checking account, pay bills, then transfer the bulk into savings. For those bills being auto drafted, inquire to see if you can pay them directly from your savings account to save a step of transferring money. For more information on this topic, I recommend reading Winning The Money Game by Adam Carroll and Chad Carden.