Explore Different Banking and Saving Options for Your Future Finances
Everyone strives for financial independence and security. But how do you get there? The journey can not only be intimidating, but it can also feel particularly difficult when you have debt. The great news is there is a good financial plan out there for everyone, it just takes some discipline, dedication and the right people to help you along the way.
What Is a Financial Plan?
A financial plan is an outline of your short- and long-term monetary goals. As you begin to plan your overall financial goals, a well thought out plan can help you achieve those goals.
Financial plans are needed in many different scenarios. Debt reduction, saving for a big expense, or preparing for your future are all great reasons to sit down and start drafting a plan. Not every financial plan is realistic - you have to set reasonable goals and work with the right people in order for your plan to succeed.
Diversification in Your Financial Plan
The best way to ensure your funds are accruing value while managing risk is through diversification. When you incorporate diverse accounts into your financial plan, you’re able to protect your money and limit risk. When you spread your finances throughout several accounts and investment types, you’re lowering that likelihood while also securing more opportunities for financial gain.
There are several types of bank accounts that are ideal components for financial planning, including high-yield savings accounts, money-market funds, CDs, and other types of investments.
IRA
An Individual Retirement Account (IRA) allows you to save money for retirement each year in a tax-free way. The interest on your contributions grows much quicker than your taxable accounts. Your bank has different types of IRA investments, with the most common one being a certificate of deposit. Annual contributions to your retirement are a key foundation to having enough money to retire. The younger you are when you follow the discipline of setting aside for retirement, the more likely you are to retire comfortably. Given the importance of tax laws to the value of contributing to your IRA, you should always consult a tax professional for advice on your IRA.
Money Market Account
A money market account is an interest-bearing deposit account. When you open this kind of account, it is insured by the FDIC. The minimum deposit for these types of accounts are typically higher, and there are restrictions on how often you can make transactions. This is a low-risk way to gain interest at a higher rate than the standard checking account.
Certificate of Deposit
A certificate of deposit, also known as a CD, is a type of savings account that earns interest over time. The difference between a certificate of deposit and other savings accounts is that you cannot touch the money you’ve deposited until the term you agreed to has ended. However, the interest rates are typically higher, and it’s a low-risk way to earn money. The length of terms can vary, but typically can range from six months to five years. While you can access your money at any time, there will be penalty fees if it is before the maturity date.
Small Spending Adds Up in Your Financial Plan
Be sure not to overlook the importance controlling your unnecessary spending today has on your quality of life later. Here are a few of the common obstacles we all face today as we prepare for financial independence later:
- Eating out vs cooking at home
- Credit card interest
- Streaming services
- Expensive cell phone plans
- Expensive gym memberships
Curbing these expenses can go a long way to freeing up more room in your financial plan. Eating out as a routine instead of a treat can easily sneak up on a budget. Likewise, not paying off credit cards in full creates unnecessary interest expenses that can make the rest of the budget hard to meet. Nearly everyone is going to subscribe to some streaming services, but those costs climb in a hurry if you aren’t prepared to eliminate those services that aren’t used often. Gym memberships bring real health benefits if you use them, but most of those benefits are provided by modestly priced gyms.
Find a Bank You Can Trust with Your Financial Plan
Ultimately, you should find a trustworthy bank that can help you navigate through your financial journey. In order to craft the best financial plan for you, the first step is reaching out to a bank that can meet your needs. Contact your local bank to start planning for your future.