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Nearly 40% of Americans have less than $500 in cash savings, survey shows (www.livenowfox.com)
submitted 7 months ago by to c/aboringdystopia@lemmy.world
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[–] 16 points 7 months ago (5 children)

Tax refunds act as forced savings for many people. It's not a good way to save as the government pays no interest on the savings. The the people then blow the money immediately on major purchases or paying down debt buildup.

Personally, I always tried to make it so that I didn't get a tax return. I always figured it cost me significant money in cash flow through the year. Always pissed me off to overpay in taxes when I could have used the money for critical things I needed during the year.

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  • [–] 9 points 7 months ago (4 children)

    the government pays no interest

    I can't remember the last time I saw a bank pay interest, either. If you want to grow a principle balance, you need to invest it, and that gets real iffy when the demented gameshow host decides to manipulate the markets.

    It seems like my 401k dips $5k every afternoon when Trump promises something insane, then bounces back the next morning when he doesn't follow through.

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  • [–] 3 points 7 months ago

    If you have more than a few thousand in your bank you need to look at their financial offerings or consider opening a high yield savings account at a larger bank. My credit union has a few offerings which give 2-3% interest as long as you maintain a balance over a certain amount (usually 1-5k) but most of the account offerings that are more focused on being fee-free only yield about 0.25% interest. And this is all without dipping into actual brokerage and other more risky financial products

    Basically it's the difference between $10k earning you $25 a year or earning you $300-400/year

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  • [–] 3 points 7 months ago (1 child)

    You can open a brokerage account like Fidelity and put the money in a 3-4% cash account(like spaxx). Takes about 10 minutes and it's low risk. Can get your money any time like a bank.

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  • [–] 2 points 7 months ago

    This is the ideal way to handle your emergency fund, toss it in a high yield savings account with a different bank from your every day one, and then it's harder to tap into if you have a mild inconvenience. Between the high yield savings account and CDs that I keep about 1/3 of my emergency fund tied up in, my emergency fund is earning me about $500/year. Is that a life changing amount of money? Of course not! But it is enough that I can basically never touch my emergency fund and it should hold its value a bit above inflation indefinitely. And as a bonus it's all FDIC insured!

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