On Your Side: Looking into ways to build your savings back up
Personal savings dwindling? Tips on how to build savings back up
BIRMINGHAM, Ala. (WBRC) - Have you had to dip into your savings in the past year or so?
For many people, inflation plays a big role in the struggle to make ends meet. Sinceray Phillips knows that first hand.
“Some older people have to make a choice between buying medicines and buying food. And it’s, you know, alongside the water bill is going up. They have a car, or they have to pay somebody to take them somewhere, the whole check is gone,” Phillips recently told us.
Inflation also means a big decrease in savings accounts. The personal savings rate, the percentage of someone’s income that they save, is around 2.4% which is one of the lowest rates in nearly 20 years.
“During the pandemic we saw some really high numbers because people were staying home, not doing as much. Now we’re seeing some lower numbers in the single digit percentage range,” Chanelle Bessette, with NerdWallet said.
Bessette is a personal finance and banking expert.
“We are living in a world that is not as constricted by the pandemic as it was a couple of years ago. People are able to go out and spend more money and travel this year,” Bessette said.
So how can you build savings back up? First, look into what kind of rates banks are offering to see if may want to change where you keep your money. Interest rates on bank accounts are going up due to the fed increasing rates over the past year.
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“Interest rates are going up on bank accounts and things like savings accounts, checking accounts and certificate of deposit are seeing some really stellar rates right now,” Bessette said.
Bessette says if you do put your money into a high-yield savings account then you are hedging against inflation a little bit...she says that money is not going to lose value quite as quickly.
“That’s the thing about inflation is that even though it might feel like you’re money isn’t as valuable, its still important to have some savings tucked aside no matter what the economy is doing if you can,” Bessette said.
You can also set up automatic transfers into a savings account. Even if it’s just a little money to start with, it can build up over time. Financial experts say when you get to the end of the month, if you haven’t touched that money then you know you can start saving that and consistently build on that to restore your savings.
How much money you keep in a savings account boils down to your budget especially when it comes to shopping for wants versus needs as UAB’s Dr. Stephanie Yates recently told us.
“What does my monthly budget say that I can afford to spend on groceries, on home improvement, on maintenance and repair, how do I manage within that budget? Do not overthink it. Instead of having a line-item budget, you can pretty much have a three-item budget, and so those three items are wants, needs, and savings,” Dr. Yates said.
If you can’t put money into savings right now, economists say use 2023 as the year to work on lowering any debt you may have.
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