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Maintain the value of your money

In a checking account or a standard interest savings account, inflation is slowly eating away at the value of your hard-earned cash. According to the government's most recent inflation data, average annual inflation in the U.S. is 2.3%. That means $100 in your checking account today will have just $98 of buying power this time next year

The average savings account has a relatively low interest rate -- the industry average is about .06%, and most basic accounts only pay .01%. That means that every year, $100 in savings will only earn up to 6 cents in interest, earnings that barely begin to replace the value lost to inflation.

That is, unless it’s earning interest in a high-yield savings account.

A good high-yield savings account will offer over 1.5% interest on savings, and specific savings investments, like certificates of deposit, or CDs, may offer even more. These are simple, easy options that will maintain the value of your money.

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Get control over your spending

A separate savings account is a smart way to discourage reckless spending and promote sound financial habits.

A savings account that is entirely separate from your checking will limit access to your cash as you can't instantly transfer money between the accounts. While you will still have easy access to your emergency fund in case something happens, adding a few extra steps can help you learn to live on the money you have available in your checking account.

Even the simple task of deciding on an amount to transfer into savings gets you thinking about your finances and forces you to budget.

It might sound simple, but what’s out of sight is out of mind!

Start sooner, save more

We recommend opening a savings account at a different financial institution from your checking account. Choose an institution offering a high APY (annual percentage yield) and note the minimum deposit required to open an account. The whole process takes about 15 minutes, but it’s well worth the investment of time.

More: Compare rates on the best high-yield savings accounts

How to save more money in 2023

Interest rates may be rising right now, but that puts savers like you in control.

SaveBetter gives you access to high-yield savings products including MMDAs, CDs, and savings accounts available from a nationwide network of banks and credit unions. Plus, get the convenience of managing all your savings in one account.

Meet all your financial goals this year with SaveBetter.

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Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.