You can earn 3%-4% on your savings account. 7 Smart Ways to Save More in 2023

According to a recent Bank of America survey, the No. 1 financial New Year’s resolution for 2023 is to increase savings. While it’s never been easier to set up a savings account, many savings accounts are already paying more than they have in a decade (see here for the highest savings rates you can get now). This means you’ll be able to increase your balance more easily, at least on the interest-earning side of things.

Simple steps you can take to save more in 2023 from financial professionals.

1. Open a high-yield savings account

According to the latest data from the Federal Deposit Insurance Corporation (FDIC), the national average annual interest rate, or APY, for a traditional savings account these days is 0.30%. Using a high-yield savings account like one of these, on the other hand, can yield an average APY of about 3% or more.

Amy Hubble, principal investment adviser at Radix Financial in Oklahoma City, said now is the time to act for those whose savings are still sitting in a low-yielding bank account. “Now that interest rates are rising, many online savings accounts through banks like Capital One or SoFi can offer rates above 3.5%,” he said.

It’s also important to read the fine print attached to any of these accounts, says MaxMyInterest CEO Gary Zimmerman. “Make sure your money is held directly in your name, in your own FDIC-insured savings accounts,” and Zimmerman says, “beware of Fintech programs or cryptocurrency platforms that promise high returns; there are frequent seizures.”

Another area to consider is payments, adds Zimmerman. “If there’s a monthly payment on the bank account, that’s a sign the bank doesn’t want your business.”

2. Play smart with this holiday bonus

With the 2022 holiday season behind us, Hubble says those lucky enough to have an employer that offers holiday bonuses should probably take advantage of it to boost their savings accounts. “Make sure a portion of any bonuses or gifts you receive go toward your savings goals so you’re not bailing out by this time next year to start saving again.” (See here for the highest savings rates you can get right now.)

3. Skip employer matching

A Vanguard report put the average employer match at 4.5%, but Hubble said that’s not necessarily enough. “Many employers will also match a portion of your contributions, but the mistake many people make is to limit their contributions to the amount of the match, often 3% to 5%,” Hubble said, adding that “all Americans should save, regardless of your age.” at least 10% of their income.”

And in 2023, it’s even more profitable to increase your contribution limits for both 401(k)s and IRAs. Employees participating in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan can now contribute up to $22,500 a year, according to the IRS. This is 2000 more than in 2022. Contribution limits for IRAs increased from $6,000 to $6,500.

4. Go undocumented

It might be small, but it’s an easy way to save money, so we’re including it: Go paperless with your payment, says Bunio. From cell phone companies to insurance companies to finance companies, everyone offers discounts to those who ditch paper statements.

5. Set long-term goals

While financial markets have seen massive losses over the past year, the long-term results tell a different story. Take the S&P 500 for example. Its year-to-date numbers, as measured by the SPDR S&P 500 EST Trust (also known as SPY), lost 18.04% through Dec. 26, according to Morningstar. However, over the past 10 years, the tracker has generated an annualized return of 12.45%.

Jeanne Sutton, a certified financial planner and managing director of Strategic Retirement Partners in Nashville, says numbers like these are important for setting long-term investment goals and not focusing on short-term confusion.

“A long-term diversified investment strategy supported by a financial plan is optimal for almost everyone,” Sutton said, adding that it’s also important for savers to “pay particular attention to their time horizon” and “not have time to retire.” ” He adds that it’s important for people to understand that “the day you plan to start taking distributions from your accounts can be very different from your actual retirement date. This also applies to younger investors who are saving for shorter-term goals, such as a first home or a child’s college.

6. Deal with your insurance coverage

Whether it’s medical, auto, disability, homeowners, or some other type of insurance, many of us buy a plan and stick with it for years and years afterward. And that means many of us are overpaying. Switch providers and you could save hundreds of dollars a year.

Even if you’re happy with your provider, it’s worth reviewing your coverage. “You always have to look at what their current plans cover. What are they getting out of it for the monthly cost,” says Nicholas Bunio, a certified financial planner with Retirement Wealth Advisors in Berwyn, Pennsylvania.

According to a Money Geek report, the average 40-year-old adult will spend $477 per month on health insurance in 2023. Bunio says that while the importance of health coverage is indisputable, there is such a thing as having the wrong plan. “For example, my parents are on Medicare,” Bunio said, adding, “their Part C plan also covers dental. However, they were paying $70 a month for a separate dental plan. Eliminating that additional plan is a savings of about $900 a year !”

7. Create a budget that plans to “have fun along the way.”

LPL consultant Tess Zigo says the most important factor in creating a comprehensive spending plan is to “create a spending plan that includes enjoying yourself today through travel or other things that are important to you.” He adds that “being responsible with money doesn’t mean you have to pinch pennies and save only. If you’re not having fun along the way, it’s defeating the purpose.”