At financial institutions, such as banks and credit unions, you can open both types of account, and it may not be a case of ‘checking vs savings’. You might find a place for both in your financial plan.

In this article, we’ll cover:

• Checking account basics
• Savings account basics
• Why you should have both

What is a checking account?

A checking account is an account at a financial institution, like a bank or credit union, that allows you to make deposits and withdrawals, also known as credit and debit transactions. Checking accounts are considered a liquid asset because you can take your money out easily. Generally, checking accounts offer both check-writing capabilities and a debit card. Account holders tend to use this kind of account for everyday expenses and paying bills. 

Banks and credit unions often offer several varieties of checking accounts, some of which may require minimum balances and/or charge fees for things like monthly maintenance, overdrafts, ATM usage, and international transactions. Every institution has different options and fees. 

Features of a checking account

Having a checking account makes it easy to deposit and withdraw your money as frequently as you need to. While every bank offers different options, most checking accounts come with a set of basic features: 

• Automatic payments: Often, you can use your checking account to set up recurring payments to merchants or other service providers. Automatic payments can be a convenient way to handle utility bills and other monthly expenses. 
• Checks: A check is a legal document that instructs your bank to pay a specific amount to a designated payee. While paper checks are less common these days, most banks offer them as an option with checking accounts. 
• Direct deposit: You may authorize your checking account to receive a direct electronic transfer of funds, as opposed to a physical check. For example, many employers give employees the option to have their paychecks deposited directly into their bank accounts instead of being paid with a paper check.
• Debit card: Your debit card draws money electronically from your checking account for making purchases; you can also use it to get cash at an ATM.
• Mobile/online banking: Many banks offer the option to access your checking account from your mobile device or computer with a secure login and password. There are also many online-only banks, which have no physical branches. 
• Overdraft protection: Also referred to as cash-reserve checking, overdraft protection is a service that provides a cushion in the event that there are insufficient funds in your checking account to complete a transaction. Many banks offer this option and may charge a fee for the service and/or require you to have a savings account at the institution.

When you’re shopping around for a checking account, keep an eye out for the features that matter most to you based on your personal circumstances. For example:

• If you use cash frequently, you might benefit from an account that provides reimbursement for ATM fees. 
• If you don’t have a lot of money left over at the end of each month, you might prioritize an account with no minimum balance requirement. 
• Another consideration is monthly maintenance fees and other types of fees the bank charges; they can eat into your balance over time.  

Common types of checking accounts

There are a variety of common checking account types. While they all serve the same basic purpose, each provides different options that may be beneficial based on your individual needs. 

• Basic checking: This type of account allows you to do the primary things you expect a checking account to do: deposit and withdraw money, write checks, receive direct deposits, and use your debit card. Some banks offer a basic checking account with no monthly maintenance fee; be aware that even if such an account is advertised as “free checking,” it may still come with fees for things like overdrafts or foreign transactions. 
• Student checking: Designed for students in high school, college, or vocational school, this type of account works like a basic checking account but offers perks for people under the age of 25. These features might include low or no monthly fees or minimum balances, or connection to a student ID to make on-campus purchases more convenient.
• Rewards checking: Some checking accounts provide rewards like points, cash, or stock for debit card purchases. The advantage of these accounts is that you get something of value without having to do anything other than use your account for your regular spending. 
• Interest checking: Some institutions offer checking options that pay interest on the money in your account, typically on a monthly basis. This can be appealing if you often keep a higher balance in the account. Bear in mind that interest rates vary from bank to bank, and they fluctuate based on the state of the economy.

What is a savings account?

A savings account is a deposit account, usually interest-bearing, held at a financial institution. Though the interest rate for savings accounts is often modest, it allows your money to grow while it’s sitting in the account. Savings accounts provide a safe way to stash money away for short- to mid-term financial goals, like a vacation or down payment on a car. Savings accounts are also ideal for putting aside money that you can access quickly for emergencies. 

Just like checking accounts, you’ll find various options for savings accounts at different financial institutions. You’ll commonly need to deposit a minimum amount of money to open the account and maintain a minimum balance. Fees vary based on the institution and account type and may include charges for things like monthly maintenance, excessive withdrawals, and inactivity.   

Features of a savings account

The main difference between a checking vs. savings account is that the latter is designed for keeping your money in the account for a longer time period instead of spending it frequently. Some of the common features of savings accounts reflect this purpose: 

• Interest: Nearly all savings accounts are interest-bearing; the longer you leave your money in the account, the more it will grow. Interest rates vary by the financial institution, and they can go up or down at any time, usually based on inflation or other changes in the economy.
• Withdrawal limits: Many savings accounts charge a fee if you make more than six withdrawals per month. This limit was once required by the Federal Reserve; it’s now optional, but several banks still impose the limit. 
• No debit card: Most savings accounts don’t come with a debit card since they’re not intended to be used for regular spending. That said, if you have a checking and savings account with the same bank, you might be able to use your debit card to deposit or withdraw money from your savings account at an ATM. 

Savings accounts do share some common features with checking accounts, including the option to receive direct deposits and access mobile/online banking. 

Consider your reason for saving and personal circumstances when looking at options. For example:

• The longer you can leave your money in the account, the more it grows, and the more you benefit from compound interest. So if you’re saving up for a specific goal, you might want to look for accounts with higher interest rates.   
• If you’re using your savings account as an emergency fund and are concerned that you may need to make a lot of withdrawals if disaster strikes, you may want an account with no fees for excessive withdrawals. 
• If you don’t have a lot of money you can put into savings at first, look for options with a low or no minimum amount required to open the account so you can start earning interest right away.  
• You also might want to compare any account maintenance fees with the amount of interest your balance will earn. If you’re spending more on fees than you make in interest, an account without maintenance fees may be a smarter choice.  

Common types of savings accounts

As with checking accounts, there are several types of savings accounts available to meet your specific needs and priorities. 

• Traditional savings account: This standard account is an accessible way to store your money and grow it with modest interest. You’ll find lots of options with different minimum balance requirements and fees at different financial institutions, so if you’re new to saving or don’t have a lot to put aside right now, this can be a good option to start a savings habit. 
• High-yield savings account: This account helps your money grow more quickly because the annual percentage yield (APY) is usually 10 to 20 times higher than that of a traditional savings account. High-yield savings accounts often have a higher minimum balance; if you have enough money to meet the requirement, you can benefit from the higher interest rate.
• Money market account: Money market accounts can be seen as a sort of hybrid of checking and savings accounts. They come with checks and, often, debit cards, like a checking account. They’re similar to savings accounts in that they earn interest and generally have transaction limits. Money market accounts usually have higher interest rates than traditional savings accounts, and often have a tiered system in which interest rates vary based on your balance. This type of account can be useful if you want the benefit of earning interest and the convenience of spending money with checks or a debit card.

Checking vs savings accounts: the importance of having both

When you’re looking into banking options, it’s not a question of choosing a checking vs savings account. They each serve a different purpose and having both can be an important way to manage your money and work toward your financial goals. Your checking account allows you to easily pay bills and day-to-day expenses with your debit card. If you use a budgeting app, you can connect it to your checking account to help plan and track your spending.  

By also opening a savings account, you can tuck money aside for the future in a spot where you won’t accidentally spend it, and reach your financial goals faster by earning interest. A savings account can also help you feel more financially secure, since you can easily access the money you’ve put aside in case of an emergency.

Stash offers online banking designed to help you manage your spending, save for goals, and build your investment portfolio with the Stock-Back^® card. It’s all powered by Stash Core, a world-class infrastructure platform that’s designed to empower everyday Americans to invest and build wealth.   

FAQ

What is better, a savings account or checking?

It depends on what you want to use your bank account for. A savings account is designed to put away money for short- or mid-term goals, like saving up for a new fridge or tattoo. A checking account is ideal for your regular expenses, like paying bills and buying groceries. In many cases, it’s useful to have both.

Is a savings account the same as a checking account?

No, they are different types of accounts, with different features and requirements. Checking accounts usually have no limit on transactions and come with a debit card you can use for spending. Savings accounts often limit the number of withdrawals you can make and usually don’t allow you to use a debit card for making purchases. 

Is a debit card checking or savings?

Debit cards usually come with a checking account. Most savings accounts don’t come with a debit card, but some banks offer one. 

Is money safer in checking or savings?

As long as you’re banking with an FDIC-insured institution, which includes most banks and credit unions, your money is equally safe in a checking or savings account. The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.

Should my paycheck go to checking or savings?

You can have your paycheck directly deposited to either a checking or savings account. Many people have their paycheck go to their checking account because they want the money available to spend right away. Some employers will split your direct deposit between two accounts, so you could have a portion go into your savings account and the rest into checking. This approach can help you stick to your savings goals by removing the temptation to spend money you were planning to put aside.  

Should my checking and savings account be at the same bank?

You don’t have to use the same bank for checking and savings. Doing so could make it faster to transfer money between the two accounts, and you might find it more convenient to have a single login for accessing all your bank accounts online. However, you may find that one bank offers the best checking account for your needs, but the ideal savings account is at a different institution. 

The post Checking Account vs. Saving Account: What’s the Difference? appeared first on Stash Learn.

Financial literacy means having the ability to assess your financial situation so you can make the right decisions about money on a daily basis. But one in six students in the U.S. don’t meet the baseline level of proficiency in financial literacy, according to the Council for Economic Education. A survey conducted by the council found that on average, people estimate that they’ve lost $1,389  due to a lack of financial knowledge. 

Having a degree of financial literacy can help you manage your current life, while preparing you for unforeseen expenses and emergencies. It will also help you develop a financial plan for the future. That way you won’t be wasting your cash, or getting yourself into debt, or taking unnecessary financial risks. Acquiring financial literacy can also allow you to understand and participate in the economy. 

Achieving financial literacy is especially important in today’s world, where people face the highest inflation rate in decades, and the ongoing pandemic, which has affected everything from the job market to housing prices. 

Stash has assembled four things that financially literate people do  to maintain a solid financial foundation in 2022. 

Learn how to budget with inflation in mind

Building a budget is important no matter what the financial landscape looks like, but it’s particularly important now that inflation has pushed up the price of gas, groceries, and more. As of February 2022, the inflation rate, which is measured by the Consumer Price Index (CPI), was 7.9% for the year ending February 2022, the largest spike since 1982. Gas prices have surged 38% over that same period, while food prices have increased 7.9%. The cost of new vehicles went up 12.4%, and used cars and trucks jumped 41.2%.

Your budget should take your total income into account, and you should make sure there is ample room for your essential expenses such as food and gas, non-essential expenses like going to the movies, and saving and investing. “While you can’t stop prices from going up at the grocery store or when filling your tank, you can still make sure you’re hitting your goals by paying attention to your habits and adjusting where possible,” says Lauren Anastasio, a certified financial planner (CFP), and director of financial advice at Stash. 

Budgeting for inflation can help you make sure you’re not neglecting financial priorities, like saving for a house or retirement. Also, continue to stay informed on what the inflation rate is, and the Federal Reserve (the Fed) is doing to combat inflation. 

Make a plan to pay down your debt

Debt is also an obstacle many consumers deal with. In the last quarter of 2021, credit card debt increased by $52 billion, to $860 billion, the most significant quarterly jump in history. 

Smart use of credit can be an important part of becoming financially literate since it helps you build a credit history, and get a credit score. Your credit score is what banks and other institutions will reference when deciding whether or not to lend you money, rent you an apartment, and more. It’s important to pay down your debt so that you can build strong credit, which can help you reach your financial goals like taking out a loan for a business or getting a mortgage for a house. 

Try to pay off your credit card bill and other debt payments in full each month, since maintaining a balance can hurt your credit score. If you have a chunk of debt you need to tackle, make a plan to do so. You might want to start with the biggest debts, or those with the highest interest rates, which is known as the avalanche method. Or you might want to use the snowball method by starting with smaller payments and working your way up.

Save for emergencies and the future

Being financially literate also means knowing how much money you need to save for what you want, emergencies, and retirement, and building those savings. With the uncertainty brought on by the pandemic, having money in an emergency fund to fall back on is crucial. “The pandemic exposed just how little people were prepared for a loss of income or even their job,” says Brannon Lambert, a certified financial planner at Raleigh, North Carolina-based Canvasback Wealth Management.

Lambert recommends setting up an emergency fund in a savings or money market account. Stash suggests that an emergency fund should have three to six months worth of expenses in it. It should also be liquid, so that you can take it out at a moment’s notice if you need to. You should also start socking away money for future purchases, and for retirement with a 401(k) or an individual retirement account (IRA). You can open an IRA through Stash.

Invest to stay ahead of inflation and stay informed

If you’re able to, one way to stay ahead of inflation and to build your financial literacy (and hopefully savings) is by investing. While you’re not guaranteed a return on any investment, investing your money is a way to try and stay ahead of inflation. Hopefully, your return will outpace the rate of inflation. If the inflation rate is currently 2%, for a simple example, and your portfolio had a return of 5%, your real return would be 3%.

In order to invest wisely, you should also stay up-to-made on market and economic news. Learning about the economy and markets is also a way to increase your financial literacy. Sign up for Stash’s weekly newsletter, The Wallet, to stay informed. 

The post How Financially Literate People Stay on Top of Their Money appeared first on Stash Learn.

And it’s common to clash with your partner over money. Of married or cohabitating couples polled, 70% said that they had gotten into a disagreement with their partner over finances in the last year, according to a survey from the Association of International Certified Public Accountants (AICPA). Those disputes mostly centered around needs versus wants (36%), spending priorities (28%), and making purchases without first discussing them (22%). 

This Valentine’s Day, you might want to reflect on how you and your partner can better handle your money. You might want to wait until after you get dessert to bring it up, but here are five ways you can improve your financial life, together: 

1. Communicate

For any couple looking to work together on their finances, the starting point is good communication. Talking about money, and the way people handle it, is crucial to developing better financial habits with your partner, especially if you hope to build a life with each other. And yet, people don’t always like to talk about money. A little more than half of married or cohabiting couples claim that they feel “very comfortable” talking to their partner about finances. 

To start the conversation, you might consider asking your partner these questions, if you don’t already know the answer: 

• How much money do you make?
• How much debt do you have? And what kind (student loans, credit cards, etc.)?
• Are you comfortable having credit card debt? Do you tend to carry a balance or pay off your bill in full?
• What is your ideal strategy for dealing with money as a couple?

Once you have that initial conversation, you may find it easier to dig into more of the details.

2. Decide whether you want to merge finances

As you start to build a life with your partner, or inch closer to that possibility, you’ll want to consider whether or not you want to merge your money, and how you want to do it. Combining your finances often becomes a central issue once you get engaged or married. You’ll have to decide on a few different items: whether or not to combine bank accounts, whether or not to get joint credit cards, and whether to file your taxes separately or jointly. 

All of these decisions come with pros and cons. “There are benefits and drawbacks to filing jointly or separately,” says Julian Schubach, a Wealth Manager at ODI Financial, based in Rockaway, New Jersey. She recommends working with a certified public accountant (CPA) to talk through best practices for filing as a couple.  Remember, filing your taxes jointly can affect your tax bracket, so you’ll want to make sure you do your research before you file.

3. Collaborate on a budget

Whether you’re single or in a relationship, it’s critical to make a budget and do your best to stick to it. If you are cohabiting or married, you probably want to sit down with your partner to hash out your budget together. There are few different budget templates you might follow, including the 50-30-20 budget, the envelope method, and the zero-sum budget. 

When creating your budget, you’ll want to discuss how much you’re comfortable spending each month, what your priorities are when it comes to saving, and how you want to pay off debt if you have it. You may also want to divvy up your responsibilities, such as keeping track of expenses and paying off bills. “I manage a spreadsheet of all our incomings and outgoings and to budget every month,” says lifestyle and money blogger Victoria Sully, based in Cornwall, England. “This is a shared document with my husband and I update it regularly, always keeping him in the loop to try and make decisions together.” 

4. Talk about debt

Talking about debt and paying it off is a big part of most people’s financial life. The average household debt in the U.S., including credit cards, mortgages, home equity lines of credit, auto loans, and student loans, was $155,622 as of September 2021. As you and your partner budget together, you should determine how you both feel about debt, how much debt you have, and what your plan is for paying it off, separately or together. 

Communicating about debt is critical especially as you combine your financial lives. You don’t want to hide a credit card spending problem from your partner, and you don’t want them to keep a significant amount of student debt from you. One study finds that couples who openly discuss debt may have greater relationship satisfaction and commitment to staying together. 

5. Decide on goals

Another thing that’s likely to come up while you budget is what your goals for the future are. You probably want to make sure you and your partner are aligned when it comes to having kids, buying property, traveling, and where you want to live and work, or if you can work remotely. All of these goals require planning and saving. Together, you can compromise on a list of your goals, and sketch out a savings plan to achieve those objectives. 

Take this time to also think about when you want to retire, and how much money you want to have saved when you do retire. Keep in mind that when you file your taxes jointly, the amounts you can contribute to your retirement accounts change as well. For 2022, you can each contribute up to $20,500 to an employee-sponsored 401(k). People aged 50 and over can make additional catch-up contributions of $6,500.

Marriage can change how much money you can contribute annually to a Roth individual retirement account (IRA). Contributions begin to phase out when you earn more than $129,000 as a single tax filer or when you earn more than $204,000 as a married couple. When you earn $144,000 or more as a single tax filer, you can no longer contribute to a Roth. The same holds true for married couples, who can no longer contribute if their joint income is $214,000 or more.

Within your Stash account, you can set up different Goals such as buying a house, having kids, and retiring, and you can add money to those goals. You can also start investing with a brokerage account and saving for retirement with an IRA. 

The post Love and Money: 5 Ways Couples Can Work Together on Finances appeared first on Stash Learn.

But before you decide how you’re going to adjust your finances in the new year, it might be a good idea to look back on how you handled your money in 2021. Did you budget? Invest? Save? Take Stash’s quiz to see if you followed The Stash Way® in 2021: 

1/10

How Well Did You Handle Your Finances in 2021?

 

Did you create a budget in 2021?

Of course

No, I didn’t get around to it.

2/10

How Well Did You Handle Your Finances in 2021?

 

Did you stick to your budget in 2021?

Yes! For the most part, I followed my budget.

No, I fell off the wagon with my budget.

3/10

How Well Did You Handle Your Finances in 2021?

 

Were you able to establish or maintain a rainy day fund ($500 to $1,000) in 2021?

Yes, I’m set up for a rainy day.

No, I still need to work on that.

4/10

How Well Did You Handle Your Finances in 2021?

 

How about an emergency fund (three to six months worth of expenses)?

Yep, I have an emergency fund to lean on should something happen.

No, I don’t have three to six months worth of savings in case of an emergency.

5/10

How Well Did You Handle Your Finances in 2021?

 

In 2021, did you pay your bills on time and in full?

Yes! I’m looking forward to a healthy credit score in 2022.

No, I didn’t exactly stay on top of my bills all year.

6/10

How Well Did You Handle Your Finances in 2021?

 

Did you pay down your debt (like student loan debt or a mortgage) last year?

Yes, I made a significant dent in my debt last year.

No, I’m entering 2022 with more debt than I’d like.

7/10

How Well Did You Handle Your Finances in 2021?

 

How did you do with retirement savings in 2021?

I regularly put money away into one or more retirement accounts.

I didn’t put away money into a retirement account.

8/10

How Well Did You Handle Your Finances in 2021?

 

Did you invest regularly throughout the year?

Yeah, I invested regularly, even if it was just a little bit at a time.

No, I didn’t stick to a schedule when it came to investing.

9/10

How Well Did You Handle Your Finances in 2021?

 

How well did you diversify your portfolio in 2021?

I was pretty good about diversifying! I made sure to spread my investments across industries, regions, and/or assets.

I could have been better about diversifying my portfolio last year.

10/10

How Well Did You Handle Your Finances in 2021?

 

Did you get the insurance coverage you need in 2021?

Yes, I’m protected with insurance coverage, such as life insurance, health insurance, home or renters insurance, and others.

No, I still need to make sure I’m covered with insurance.

 

How Well Did You Handle Your Finances in 2021?

 

You scored 

Share this quiz with others!

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Check out Stash’s 2022 Financial Checklist for more ideas about how to manage your money.

The post How Well Did You Handle Your Finances in 2021? appeared first on Stash Learn.

A savings surge caused by the Covid-19 pandemic is reportedly turning into a slump. 

Median household checking account balances have fallen since the last stimulus payments that went out in the spring of 2021, according to Moody’s Analytics. 

Over the last few months, as Covid-19 vaccines have rolled out, people have started returning to work and to “normal” life, which also translates to increased spending. In the third quarter of 2021, consumer spending rose at an annualized rate of 1.7%. But that uptick has been accompanied by record high inflation, which has increased the cost of goods and services, including gas, groceries, and rent.

Inflation is typically measured by the Consumer Price Index (CPI), which shows the percentage change in prices paid by urban consumers on goods and services. The CPI is produced by the Department of Labor’s Bureau of Labor Statistics (BLS). As of November 2021, the inflation gauged by the CPI stands at 6.8%.

While low-income households saw their balances increase the most from the influx of cash from stimulus payments and advanced child tax credit payments, these households also reportedly spent that extra money the most quickly. Checking balances for this demographic have increased, but not by much, despite stimulus payments. For example, the median checking balance for people earning less than $30,296 annually was $961 for the week ending September 25, 2021, according to research from JPMorgan Chase and the New York Times, about $393 more than the same week in 2019.

Median checking balances among low-income households for September 25, 2021:

Source: New York Times and JPMorgan Chase

A steep turnaround in savings

As of October 2021, the personal savings rate has fallen to about 7%. That marks a dramatic change from the height of the pandemic last spring, when many people were staying home and receiving stimulus payments from the government. Consumers saved a record 34% of their disposable incomes as of April, 2020, up from 8% in February, 2020. The savings rate remained higher than usual throughout the first year of the pandemic, spiking to 27% again in March 2021. 

Make a plan for sensible spending

The holidays are coming up, and that can make it more difficult to save money when there is pressure to buy gifts for loved ones, and spend money on travel. Be extra careful not to spend beyond your means this holiday season, and try not to dip into your savings. And while you might use your credit card to purchase gifts, don’t rely too heavily on credit. You don’t want to end up with low savings, and debt to pay down.

If you’re struggling to get your savings back on track, Stash has some additional tips: 

Establish savings goals

It might be helpful to set goals when you’re saving. If you want to buy a car, purchase a home, or establish college savings for your kids, remember that each time you put money into savings. You can create Goals within your Stash account, and move money into that Goal each time you save.¹ 

Set up an automatic transfer

You might want to set up an automatic transfer into your savings account (or your Goal)¹ each time you get paid. Setting aside a little money from each paycheck can help you keep that money out of sight and out of mind. Remember that you want to have a rainy day fund with $500 to $1,000 for unexpected expenses, and an emergency fund with three to six months of expenses in case you suffer a larger set back, such as a job layoff. Once you have those savings established, you can invest in a brokerage account or for long-term goals. 

As always, remember to budget

You may already have a budget. If you don’t, creating one can help you get your financial life in order. Making room for savings in your budget can help you prioritize setting aside money for emergencies and long-term goals. 

If you already use a budget, but are struggling to save, take another look at your budget and see where you’ve been missing the mark. Maybe you’ve been dipping into your stimulus savings because your rent increased and you need to adjust, or maybe you’ve been spending more on going out to dinner than you meant to. You might need to shift the structure of your budget to reflect your needs.

The post What Happens When Stimulus Money Runs Out? appeared first on Stash Learn.

In 2020, holiday shopping arrived while the Covid-19 pandemic was in full swing, and before the widespread rollout of vaccines. Consumers reportedly spent an average $312 during the four-day stretch from Thanksgiving to Cyber Monday.

And because of the pandemic, consumers shopped more online, and over a more extended period of time. Total online sales during the 2020 holiday season increased to $209 billion, a 24% jump year-over-year. Holiday retail sales totaled $789.4 billion, an 8.3% increase compared to 2019. 

For 2021, both in-store and online sales are expected to increase between 8.5% to 10.5%. 

In-store shopping is expected to account for 33% of holiday sales, according to a survey from consulting firm Deloitte, compared to 28% in 2020. 

Your health and safety are still the most important thing to keep in mind during Black Friday shopping this year. So if you do plan to shop in stores, remember to wear a mask  if required.

Here are Stash’s tips for taking advantage of deals without overspending on Black Friday, Cyber Monday, and beyond.

1-Build a budget and stick to it

Before you start adding items to your cart this year, you need a budget. And If you haven’t set one up, consider using one like the 50-30-20 budget. First, figure out your monthly income and then break that into three different categories: necessary, fixed expenses (50%) variable expenses (30%), and savings and investments (20%). Your holiday shopping will come from your savings, and your discretionary income. You can use this budget template to stay on track.

You might have also been saving specifically for your holiday spending, so take any funds you’ve set aside into consideration as well. Once you have a set amount of money in mind, you can avoid spending money you don’t have on gifts for other people, or for yourself. You might want to create a partition¹ in your Stash account that’s dedicated specifically to money that you’ll use for holiday gifts. 

2-Don’t get distracted by unnecessary purchases

While it’s nice to pick up something for yourself while you’re doing your shopping this holiday season, don’t get overwhelmed by items that aren’t in your budget. Don’t go to a store or browse online unless you know exactly what you’re looking for and what it’ll cost. 

Consider writing out a list of all the things you want to buy, and then see if you can find discounts by shopping around.

3-Do your research and compare prices

If you have a specific item in mind that you want to buy during the holiday sales, figure out how to get the best price for it. Maybe you’re planning to buy a slow cooker for your sister or a tablet for your kids. Look around for which store is offering the best price for what you’re buying. Something on your list may go on sale on a specific day or at a specific time. 

You might also be able to get cash back, discounts, or rebates through third-party sites such as Rakuten to get Black Friday deals. Or you can use extensions like the Honey app to get discounts and promo codes for certain online purchases.

4-Use a card that earns rewards 

You might have a card that you can use to earn rewards or cash back points. Try to use those reward cards when you’re doing holiday shopping on Black Friday so that you can earn rewards while also getting the best prices.

With Stash’s Stock-Back® card², you can earn a percentage of every qualifying purchase back for each purchase that you make. So when you buy something from Amazon, you can earn a percentage of that purchase back as Amazon stock. 

5-Make sure that you can return items

Lastly, make sure that you (or the person you’re shopping for) can return whatever you purchase. If you find a better price for the item or change your mind, you’ll want to be able to return it. Be aware of the return policies where you’re shopping and keep any receipt that you receive. 

Consider these steps to help you avoid spending too much money on gifts this holiday season. And remember to stay safe while you shop this year!

The post 5 Tips for Saving Money on Black Friday and Cyber Monday appeared first on Stash Learn.

That’s according to Principal Financial Group’s recent survey of “super savers,” people who contribute 90% or more of the maximum amount possible to employer-sponsored plans, or who made a contribution of 15% or more to those accounts from their paychecks.

Employer-sponsored plans, which include 401(k) and 403(b) accounts, allow most users to contribute up to $19,500 annually.

And you don’t just have to be a high earner to be a super saver. More than half of those surveyed earn less than $100,000 annually. And almost a quarter of respondents make less than $50,000 per year. More than half of the super savers surveyed estimated that they saved $20,000 or more in 2021. The highest percentage—31%—of respondents estimated that they saved $20,000 to $29,999 in 2021. 

The study finds that it’s possible for Gen Z to start making strides in saving for retirement and other future goals, regardless of their income.

How Gen Z  is saving

The survey polled 1,408 people between the ages of 19 and 56 who have retirement plans with an employer. Of those surveyed, 43% identify as Gen X, 49% are part of Gen Y—also known as Millennials, and 8% are members of Gen Z. 

Gen Z, which is defined by Pew Research Center as people born after 1996, hasn’t received as much media attention as Millennials, because it’s a smaller demographic and, for the most part, is just now joining the workforce. Gen Z also faces a unique set of challenges, as they’re entering their adult lives with an economy marked by the Covid-19 pandemic. 

While Gen Z was the youngest generation polled, they still account for almost 10% of the super savers in the survey. Those Gen Z respondents feel comfortable about the present, and positive about the future. Seventy-eight percent of Gen Z super savers describe their current financial situation as “comfortable.” Almost three-fourth of Gen Z respondents feel comfortable about the retirement planning process. Six-seven percent of Gen Z savers surveyed said that they’re confident they’ll have enough money to live comfortably in retirement.

Gen Z reported the highest degree of confidence in their financial future:

Gen Z is also most confident they will have enough money in retirement:

In fact, increasing contributions to retirement savings is a top priority for Gen Z super savers, with 33% of respondents saying it’s the most important goal they’re working towards. (Saving for a big purchase, such as a house, was the top goal for 61% of Gen Z respondents.)

And Gen Z seems to understand that it’s important to start saving for retirement as early as possible. Of all the groups surveyed, 71% said that they started saving for retirement in their 20s. The highest percentage, 16%, said that they started at age 22, which is around the age when many people graduate college and enter the workforce.

How you can become a super saver

Since most members of Gen Z are just entering their 20s, the research demonstrates you can be a super saver and get started early saving for retirement. Stash has some suggestions to help you get started. 

Time is on your side:

Having a retirement account can help you start saving for the future, and if you don’t already have one you can consider opening one. With Stash, you can open an individual retirement account (IRA). You can use an IRA to set aside money for the future, especially if you don’t have an employer-sponsored plan. There are two kinds of IRAs: Traditional and Roth. Traditional IRAs are often called tax-deferred accounts because you don’t pay taxes on that money until you withdraw from the account in retirement. On the other hand, you make contributions to a Roth IRA post-taxes, so you don’t pay taxes on the money when you make withdrawals.

Traditional vs. Roth IRA

A traditional IRA is funded with your pre-tax dollars, so the money you contribute to your traditional IRA can lower your annual tax bill.

There are annual limits to what you can contribute. You can put up to $6,000 away each year. Once you’re 50 or older, you can contribute up to $7,000 annually.

After age 59 ½, you can take money from the account with no penalties. By age 70 1/2 you’re actually required by the IRS to start taking money out of your account. This is called a required minimum distribution (RMD).

RMDs are the amount you must withdraw from your traditional IRA starting at age 70 ½. The amount is determined by an IRS formula that comprises life expectancy and account value.

Roth IRAs

In contrast, you  fund a Roth with the money you’ve already paid taxes on (your net income). Once you’ve funded the account, your earnings can grow tax-free.

Roth IRAs also have yearly contribution limits, meaning you can only put in $6,000. However, like a traditional IRA, if you’re 50 or older, you can contribute up to $7,000.

When you’re 59 ½, you can access this money without paying a penalty. Unlike a traditional IRA where you are required to begin taking money out of your account by age 70 ½  (or age 72 if your 70th birthday is July 1, 2019 or later), you can keep adding to your Roth IRA for as long as you like. (There are limits based on income, and tax filing status, which you can read more about here.)

50-30-20 budget

If you already have a retirement account, including an IRA or an employer-sponsored 401(k), see if you can increase or even reach the maximum contribution limit on those accounts. One way to prioritize saving is to make a budget that includes room for spending, saving, and investing. Consider using the 50-30-20 budget, which allocates 50% for necessary expenses, 30% for non-essential costs, and 20% for saving and investing.

In addition to having a retirement account, investing in a brokerage account can help you build savings. Investing tends to help protect your money from the effects of inflation. ​​While all investing involves risk, investing your money can help you  stay ahead of inflation.

Remember to follow the Stash Way, our philosophy for investing, which includes investing small amounts of money regularly in a diversified portfolio.

The post Gen Z: Here’s how You Can Become a Super Saver appeared first on Stash Learn.

According to a July 2021 analysis conducted by Stash of more than 700,000 customers, BNPL usage increased more than four times in the seven months from January to July 2021, compared to the same time period in 2020. The amount customers spent with BNPL also surged more than eight times with five of the top BNPL services. 

However, it turns out millennials are the biggest users of BNPL, making up 58% of Stash BNPL customers. Meanwhile, Generation Z customers have seen the biggest surge in BNPL usage, with BNPL adoption climbing 130% among this age group year over year. 

And Stash’s findings seem to mirror more general consumer research. In a 2020 survey by credit card research company Cardify, 44% of respondents said that BNPL is somewhat or very important in helping them decide how much to spend during the holidays, one of the peak buying times of the year. Forty-eight percent of respondents also said that BNPL might prompt them to spend 10% to 20% more than they would on a credit card.

BNPL use and investing habits

Although there may be no definitive correlation, Stash’s survey found that, across all generations, BNPL users have 38% less money invested on average on the Stash platform than non-BNPL users. On average, for customers whose income ranges between $0 and $25,000, millennial BNPL users’ total Stash investments are 28% lower than millennials in the same income bracket who don’t use BNPL. Similarly, for customers whose income ranges between $25,000 to $50,000, total Stash investments for millennial BNPL users are 34% lower than millennials in the same income bracket who do not use BNPL.

Note: This data doesn’t necessarily mean that  BNPL usage directly causes lower levels of investment. Additionally, the patterns Stash found compared data during a time when Covid-19 has been taking a toll on the economy.

Methodology

Stash analyzed Buy Now, Pay Later usage among roughly 770,000 Stash customers from January to July 2020 and from January to July 2021, using anonymized and aggregated data from customers’ external banking transactional information via Plaid. For the purposes of this research, Stash looked at transactions made with leading Buy Now, Pay Later companies Affirm, AfterPay, Klarna, Quadpay, and Sezzle, and compared it with aggregated and anonymized banking transactional data from customers who did not use these services in the given timeframe. 

Why people use BNPL

BNPL can help shoppers plan their spending over the course of a few weeks or months. It can also make it easier for people without credit, or who don’t want to use a credit card, to pace their spending. While most BNPL companies don’t report to credit bureaus, preventing users from building credit with them, some experts say that credit bureaus may start including BNPL data in the future.  

The two biggest reasons why people use BNPL are because it may be easier to make payments, and because BNPL may offer more flexibility, according to data from market research firm C+R Research, based in Chicago, Illinois. BNPL lets people break purchases into installment payments, so they can chip away at an expense over the course of several months at a simple rate of interest. That stands in contrast to credit card charges, where consumers have to pay their balances off at the end of a billing cycle, or potentially pay a higher rate of interest on the remaining charges. This also means you can budget for how much of each paycheck will need to go to a BNPL payment. 

Simple vs. compound interest

BNPL also lets people buy something and pay it off, typically over a period of months, without having to accrue significant interest, in many cases. Some companies, such as Affirm, offer payment plans with simple interest, while others, such as Afterpay and Klarna, offer zero-interest plans. (As a reminder, interest is what a lender charges on a loan. The interest rate dictates how much you’ll pay in interest relative to the original amount lent, the principal.) 

With simple interest, the lender calculates interest based on the principal amount alone. With compound interest, the lender charges interest on the principal amount, as well as any previous interest accrued. So typically, simple interest may be more favorable to the lendee. The longer it takes you to pay off the loan, however, the more likely you are to have to pay interest. 

For people who haven’t had a chance to start building credit yet, or are rebuilding their credit, BNPL can be an alternative to a credit card. BNPL providers can give people without credit access to a loan. Afterpay, for example, reportedly instantly approves applicants without checking their credit score. Other options such as Klarna and Affirm perform soft credit checks. A soft credit check appears on your credit report when it’s checked for reasons unrelated to lending money, while a hard credit check appears on your report when your credit is checked for a new loan, credit card, or line of credit. A hard credit check usually temporarily lowers your credit score, but a soft credit check doesn’t. 

Follow the Stash Way

BNPL comes with pros and cons. Know the details so you can make strong financial decisions to benefit your bottom line.

Find out more about BNPL here.

If you decide to use BNPL, consider practicing good financial habits when you do. Consider only using BNPL for things that are already in your budget, and that you can pay off quickly without accumulating interest or late fees. Make sure you account for payments in your monthly budget, and make payments automatic. If you put your BNPL payments on a credit card, make sure to pay off your monthly credit card in full so that you don’t rack up interest or hurt your credit score.

And consider following Stash’s guidance for financial well-being, called the Stash Way. Build a budget that includes room for your expenses, savings, and investing regularly.

The post Stash Survey Finds More People are Using Buy Now Pay Later appeared first on Stash Learn.

About one third of gay men and lesbians have reported suffering some form of violence from their family members because of their sexual orientation, according to Lambda Legal, a nonprofit helping to achieve civil rights equality for the LGBTQ community. What’s more, those who have been rejected by family or primary caregivers tend to experience more negative mental health and physical outcomes. 

Even if a young LGBTQ+ person is away from family, for example at college, coming out can be a process that has lasting consequences. For example, if someone has relied on their family for financial support, and been rejected, this person may now be on their own. Without ample income, it might be difficult to afford housing and other basic necessities.

If you’re preparing to come out to your parents and peers, and are concerned about the financial repercussions, here are some steps you can consider taking to prepare. 

Save as much as you can

If you receive some sort of income (say, from a part-time job), set some of it aside in a savings account. This money will come in handy when you need it to cover upfront expenses, such as a deposit on an apartment lease, or fees for books.

David Auten-Schneider, co-founder of the personal finance website Debt Free Guys, says he was raised a Jehovah’s Witness, which made it difficult for him to come out to his parents, especially since they encouraged him to pursue the ministry. He says he earned between $500 and $600 a month working part-time jobs cleaning floors for a grocery store and waiting tables, but even that small sum allowed him to save up $650 for a deposit for his first apartment. 

“I did at 25 what I should have done in my teens and saved some money,” he says. “I believe it’s important for kids to have their own savings account, especially anyone who is living in a home where they know their family will not accept them for who they really are.”

While any dollar amount can go a long way, aim to set aside at least 10% of any income you earn. Consider keeping this money in a savings account in your own name only.  Auten-Schneider also suggests letting a confidant know that you have this account in case something happens to you. 

“Even having a few hundred dollars [can be] enough for a few necessities,” he says.

Seek out college resources

If you’re in school, your college’s student affairs office can help you look for emergency grants, such as through the the United Negro College Fund (UNCF), that offer assistance for housing and school costs. Some have their own funding programs, such as the University of Florida’s Aid-a-Gator, which provides funding for expenses in the event of an emergency. There’s no shame in asking for help when you need it. These programs are designed to help people in a time of need.

Students who can’t afford to pay for basic necessities can also look for a local college food bank through the College & University Food Bank Alliance. It can be a useful resource to ensure you don’t go hungry as you’re getting on your feet financially. 

If you’ve been relying on your family to help you pay for tuition, now is the time to look into scholarships. Campus Pride, a nonprofit organization helping campus groups and student leaders to become more LGBTQ+-friendly, and offers an extensive list of scholarships specifically for those who identify as LGBTQ+l. Your office of student financial aid can also help you with finding scholarships you’re more likely to receive. These can include ones based on financial need or your area of study. 

Connect with your local LGBTQ center

Auten-Schnider suggests connecting to local and online LGBTQ+ support groups, such as ones that specifically help and support LGBTQ+ youth experiencing homelessness. Here, you may be able to find emotional support and other financial resources. 

“Adults in these centers are trained to help LGBTQ+ youth with both affirming and non-affirming families which may be the mentor or guide you need when your parents aren’t there for you,” he says.

Lillian Karabaic, the host of the podcast Oh My Dollar!, works with LGBTQ+ youth who experience homelessness after coming out. She adds that you can ask these groups for support in areas such as  applying for government assistance, getting clothing for job interviews, medical testing, and buying food. Some even help people apply for student loans. 

“Don’t forget to reach out to other [LGBTQ+]  friends…[and ask] around about informal support groups too,” she says. “There’s a reason we call it Chosen Family.”

Create several what-if scenarios

Even if you have savings and a budget, consider creating a game plan for multiple scenarios. You never know how the conversation with your parents will go, or whether someone else will out you. Having a plan in place to fall back on can give you peace of mind.

Create lists of items you may need and want to take, and consider where you’ll pack and store them in the event you need to leave, as well as where you can stay. You may also want to think about how to access your savings account in a pinch. 

All of the above steps may feel intimidating, but don’t give up hope. 

“There are plenty of queer youth who’ve come from seemingly desperate situations that have grown and become remarkably successful and happy members of the LGBTQ community,” Auten-Schneider says. “You have plenty of years ahead to have a good time and you will.”

The post Coming Out? Here’s How You Can Prepare Financially appeared first on Stash Learn.

That’s according to a May 2021 survey¹ from Stash on the changes to the child tax credit. Starting July 15, 2021, the Internal Revenue Service (IRS) will raise the yearly tax credit for children below six-years-old to $3,600 and for children between six and 17 to $3,000 from its current $2,000 per child. 

This money is part of the $1.9 trillion stimulus package, called the American Rescue Plan, signed into law in March, 2021. It is an expansion of the existing child tax credit of $2,000 per child. The child tax credit began in the 1990s as a $400 per child credit for children living in poverty.

The changes to the tax credit come as inflation has driven costs for families to their highest level since 2008. Prices have increased for everyday items including food, clothing, shelter, fuel, transportation, doctors’ and dentists’ services, drugs, and other goods and services. 

The revamped tax credit will reportedly benefit 88% of American families with children. Individuals who earn an adjusted gross income (AGI) of $75,000 or less, married couples who earn $150,000 or less, and heads of household who earn $112,500 or less will be eligible to receive the credit. Additionally, those who qualify can receive half of the benefits as monthly payments, and the other half after filing their tax returns for 2021. Those monthly payments reportedly will be $250 per child between six and 17, and $300 per child under 6. Taxpayers can still opt to receive the full amount after filing. 

Ahead of these tax credit changes, Stash asked Americans how they feel about the enhancements, and what they plan to do with the money: 

Stash’s survey findings

One third of those surveyed said their childcare costs increased during the pandemic, but millennial and Gen Z parents were more than twice as likely as older generations to say these expenses increased over the past year. Fifty-two percent of millennials and 47% of Gen Z parents said their costs went up during Covid-19. Meanwhile, 28% of Gen X parents and 17% of Baby Boomer parents reported paying more for childcare during the pandemic.

On average, U.S. families spend $8,355 per year per child on child care alone, according to a Bankrate survey. 

Stash’s survey found that more than half of the parents who are eligible for the child tax credit plan to save the money, regardless of how many kids they have. A further 20% said they plan to use the money to pay off debts. About one-third of those surveyed say they will spend the credit on items for their children, such as school supplies and other retail items (An equal percentage of men and women said they were likely to spend the money on these things.) But, women are twice as likely as men to use the money for weekly necessities, such as groceries. Women are also ten percentage points more likely to use the money to pay bills. 

One-fourth of those receiving the credit said they would put the money in an investment account. However, the survey also found that men were more likely to invest the extra money, with 46% of men saying they would put the money in a personal investment account compared to 11% of women. Women are more likely to choose a standard savings account, with 57% of women choosing this option. 

While women might be less inclined to invest than men are, they tend to maintain a more level head than men during periods of market volatility, when they do invest. Stash recommends starting to invest early and doing so on a regular basis over a long period of time. 

Saving and investing with Stash

If you set up Direct Deposit with your 2020 tax return, you’ll receive your child tax credit via Direct Deposit. Your Stash account can help you spend or save the money for your kids. You can set up Goals in your Stash account, such as spending on child care or paying for groceries or school supplies.² 

You can also set up a custodial account for your children with Stash.³ A custodial account is essentially a brokerage account for children to access when they reach the age of majority, which differs from state to state, with some investing and tax benefits. Custodial accounts have been around for decades. They’re also known as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. Generally speaking, different states typically allow one versus another. UTMAs allow for investments in more types of assets, including real estate. UGMAs confine themselves to more traditional securities.

With Stash+⁴, you can open two custodial accounts.

The post Spend or Save? How American Consumers Plan to Use the Child Tax Credit appeared first on Stash Learn.

Financial literacy is strongly linked to positive financial outcomes, according to a recent study by the Financial Industry Regulatory’s (FINRA) Investor Education Foundation. But many children don’t receive a financial education at all. Instead, they learn about earning money, saving, investing and spending from their own experiences.

Lack of financial literacy education in schools means that many parents must take matters into their own hands. Taking the initiative to teach your kids about money can better prepare them for the financial realities they’ll face as adults.

When should you start talking to your kids about money?

It’s never too early to start teaching children about money. In fact, they’ll likely pick up on your cues whether you set out to teach them or not—so start setting a good example early.

Kids are good at noticing how you feel, so consider what emotions you want to project around money. If you experience a lot of anxiety around money, they’ll notice, and they’ll make that association. If you approach money matters calmly and confidently, they’ll pick up on that, too, and hopefully use the same approach as they get older.

The words you use to talk about money also matter. For example, avoid using words like “broke.” Instead of saying you “can’t afford” something, try saying, it’s “not in our budget.”

Direct money lessons can be taught even to young children. Use coins to help them learn the value of money and different ways to count it. If you take your child with you to the grocery store, tell them how much each item costs as you put it in the cart. Or consider recreating a shopping experience at home, using coins and household items.

How to introduce kids to saving

A piggy bank is a classic first tool for saving, but your child may learn more effectively if they divide their savings according to a few simple categories. Give this a try: help them label four different jars with Needs, Wants, Goals and Causes. When they receive money for their birthday or from an allowance, encourage them to divide it among the four jars, considering which among them are most important.

This method is a great way to teach your kids the difference between wants and needs. For a child, a Want might be candy or a toy, while a Need might be something necessary for school or a sport. The Goals jar, meanwhile, is for things they want months or even years in the future, such as a new bike. And the Causes jar encourages children to set aside money for gifts, or for a charity of their choosing.

Conversations around the dinner table are another great way to start teaching your kids about saving. Even if it’s just once a year—during Thanksgiving weekend, for example—try having a discussion with the entire family about savings goals for the following weeks, months, and years. This is also a good time to discuss any charitable gifts you’re planning to make. Including your children in this conversation will demonstrate the value of planning and giving, and help them feel involved in the family decision-making process.

How to teach your kids about earning money

Teaching your kids about chores can help give them a sense of responsibility, pride, and self-confidence. Depending on their ages, kids can  do dishes, take out the trash, vacuum, mow the lawn, and help out with many other household upkeep activities. Consider creating a weekly chore chart to help your kids understand which chores are expected of them.

When you tie an allowance to these chores, you can teach your kids a valuable lesson about earning money. In most cases, children don’t see their parents working all day, so it can be easy for them to imagine that money is a resource that has no connection to any particular activity. Teach them that money comes from work, and treat their allowance as payment for the chores they do each week.

You might also consider giving your kids extra allowance money if they practice good savings habits consistently. This practice can help reinforce the value of saving.

Establishing money management

You can introduce young children to money and debt management by teaching them how to create a budget. One way to do this is to budget for an activity to do together, like a picnic. Explain to your child that you have a set amount of money to spend on the picnic and create a list of all the items you want to buy. This will help teach your child that you might not be able to afford everything you want under the budget you’ve set, and to prioritize certain items above others.

When your children are older, you can start including them in family budget discussions. This is an excellent setting for children to start learning about the various recurring bills you pay, and the money you set aside for regular expenses like food and gas.

Preparing for the long-term with a custodial account

Consider setting up a custodial account for your kids to help them save and invest while earning interest. All transactions will have to be approved by you, so your child can’t make investment decisions or withdraw money without your go-ahead. Take this opportunity to introduce your child to the concept of compound interest and its power to help them build wealth over time. Note: When children reach the age of majority, they get full legal control of the custodial account. The age of majority can vary by state.

With Stash+¹, you can open two custodial accounts for your kids², with a minimum deposit of only $1.00. You can use Stash to show your kids how to save for their goals and invest their money.³

How to set up a custodial account with Stash

If you’re ready to teach your child more about saving and investing, consider opening a Stash custodial account. Choose how much you want to invest, starting with as little as $5, and simplify investing by making automatic contributions.

The post Here’s How to Teach Your Kids About Money appeared first on Stash Learn.

The reality looks quite a bit different, and it’s something worth reflecting on as we celebrate Asian American and Pacific Isalnder Heritage Month in May. It turns out there’s a significant wealth gap between Whites and Asian Americans in the U.S., with the former earning approximately 15% more than the latter according to research from Yale University. And income economic inequality is actually greatest among Asians than any other group in the U.S.

While it’s not entirely clear why the income gap is so huge among Asians in America, it may be related to the group’s diversity: There are 23 million Asians in the U.S. representing more than 20 countries. 

For starters, almost a third of Asian Americans in the U.S. live in multigenerational households. Since income data is typically collected according to households, income might appear higher among Asian American households in the U.S. than a single-family one, says Pamela Capalad, a certified planner and CEO and founder of Brooklyn, N.Y.-based Brunch & Budget. That income might include a grandparent who receives Social Security benefits, and a teen who has an after-school gig, points out Capalad.

What’s more, many Asians come to the U.S. so they can send money home to support their families. So while they might make more, their wealth might be less. Last, the education levels among Asians vary greatly in the U.S.

“There are a lot of Asian Americans who came here as professionals, and there are a lot of Asian Americans who came here as refugees,” Capaland says.

And with that in mind, the financial planning needs of Asian Americans may be different and more complex than for other groups. Spending behavior and cultural differences may play a role in how Asian Americans can narrow the income gap and build generational wealth. 

Here are some things to consider:

Create a savings account specifically for the family. There is often an expectation in Asian American families to help aging parents or relatives who need financial assistance. Creating a family savings fund can help protect your own financial health. “When you’re a first generation with a professional salary, and your parents are immigrants, you’re most likely in that in-between generation of needing to take care of the generation before you,” Capaland says.

She recommends creating a savings fund just for your family, and unexpected family expenses, and making it part of your budget. That way, you won’t be caught off guard, and you won’t be eating into your own attempts to save and invest.

Know where homeownership fits into your financial goals. Asian Americans typically favor the idea of buying a home and real estate, says Danqin Fang, a senior financial advisor at the Coral Gables, Florida-based wealth management firm Evensky & Katz/Foldes Financial. It might be because it’s a tangible item that represents security, and there might be pressure from parents to purchase a house. Asian Americans typically think of homeownership not as an investment that you buy and sell in a few years, says Capalad. They tend to think of buying a “forever” home, something you hold onto for 40 or 50 years, then pass along to your children. If that’s the case, think about how that plays into your financial plans, and consider other investment opportunities.

Get hands-on with your family’s estate planning. Among the Asian American community, there tends to be a cultural aversion to estate planning, says Andrew Wang, a managing partner at the Mendham, N.J-based financial planning firm Runnymede Capital Management. “Many older Asian Americans especially tend to avoid the topic of death,” Wang says. “Sometimes, it’s superstition. Other times, the younger generation has difficulty bringing up the subject while maintaining respect for the older generation.”

As your parents’ financial plans can greatly affect your own, make sure you’re familiar with your parents’ financial planning strategy. “You have to have your own estate plan in place,” says Capalad. “But let’s also make sure your parents have one.” Otherwise, after your parents’ pass, their assets could get lost in an abyss of probate court and legal fees.

Learn about investing. While it’s baked deeply in many Asian Americans to “save, save, save,” sometimes it’s not clear what one is exactly saving for, or why they need to save, says Fang. Once you’ve got your rainy day and emergency funds all set, then it may be time to put your money to work. A good place to start is to learn of ways you can build wealth, for example by investing, instead of letting money sit in a bank account. 

Saving might feel like the safe thing to do, and it’s the thing that’s guaranteed, adds Capalad. “Not understanding the stock market or not understanding what investing is really prevents people from doing that.”

Capaland recommends learning the basics about investing, for example what it means to invest in the stock market, principles of long-term investing, and how investing can help grow wealth over time.With Stash, you can start investing small amounts of money and saving towards your long-term goals.¹ Stash allows you to invest in stocks, bonds, and exchange-traded funds (ETFs). When investing, consider the Stash Way®,investing small amounts of money regularly in a diverse portfolio.

The post Creating Financial Wellbeing for Asian Americans appeared first on Stash Learn.

As of January 2021, Americans saved  20.5 percent of their disposable income, an increase of 7 percentage points compared to December, 2020.  While that’s down from a record savings rate of 33 percent in April, 2020, Americans are still spending less than they did before the pandemic, likely because of continued shutdowns and restrictions in place in many states. 

The financial stress caused by the pandemic has also likely pushed more consumers to save their money instead of spending it. The current unemployment rate in the U.S. is 6.2 percent, down from a high of 14.7 percent in April, 2020.

Another reason is that federal rescue programs, including an increase to unemployment insurance benefits and stimulus checks, has temporarily increased consumer incomes, according to reports.

If you need to, continue to lean on your emergency fund and save your money carefully. If, however, you’ve found yourself saving more money than you usually do, you may want to consider these strategies for maximizing your savings and improving your financial situation in the long term.

Increase your retirement contributions

Start building retirement savings now if you haven’t yet. There are two main types of retirement accounts: 401(k)s and individual retirement accounts (IRAs). A 401(k) is an employer-provided retirement account that allows you to contribute pre-tax earnings to retirement. Some employers even match your contributions. An IRA is a type of account that anyone can set up. With a Traditional IRA, you can make contributions on a pre-tax basis. With a Roth IRA, you can make contributions after taxes. 

If you already have retirement accounts, you probably also already make regular contributions to those accounts. Consider increasing those regular contributions, especially if your employer will match contributions. 

Keep in mind that there’s a limit to how much you can contribute to your retirement accounts per year. For the 2020 tax year, you can contribute up to $19,500 to a 401(k) and $6,000 to an IRA. If you’re older than 50, you can make catch-up contributions, up to $7,000 into an IRA or $26,000 into a 401(k). Taxpayers can make contributions until April 15, 2021.

Pay off a chunk of your debt

Now might also be a good time to make pay down your debt. No matter how much money you save, your debt isn’t going to go away and the longer it sticks around, the more interest it will accrue and the more difficult it will be to pay off. 

So if you have a lot of credit card debt or student loan debt, for example, try to increase the monthly payments you’re making. While some credit card companies extended deadlines and waived interest early on in the pandemic, they may not be doing so now. Consider paying your credit card bills in full so that they don’t stack up. 

For your student loans, keep making payments (and even bigger payments if possible) to take advantage of a zero-interest period, if it applies to your loans. Federal student loans aren’t accruing any interest through at least September 30, 2021 thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other more recent emergency relief measures. Making payments now could help you get paid off more quickly. If you have multiple student loans, you may also want to take advantage of the zero-interest period by paying off the loans that have the highest interest rate.

Put money in a high-yield savings account¹

You can probably make your money work harder than it already is by putting it into a savings account with a high yield. The annual percentage yield (APY) on a savings account can tell you by how much your savings will grow each year in your account. The average APY on a savings account is .06%, but you can find accounts with much higher APYs, even more than 1%. 

Some high-yield savings accounts have higher minimum balance requirements. So if you have an amount of money that you’re willing to put away for a while to gain interest, this might be a good option for you. If you haven’t touched your federal stimulus check, for example, you could potentially put it away in one of these accounts.

Start investing small amounts or increase your usual amount

Maybe you’ve never been able to make room for investing in your budget. You might want to use some of your extra savings to start investing. You can start by investing just a little piece of your savings each month. 

Apps such as Stash allow you to invest small amounts of money and buy fractional shares, or portions of shares in stocks and exchange-traded funds (ETFs). You can also use Recurring Transactions to set up regular investments. If you’re already investing, you might want to increase your regular investments if you’re able. 

However you decide to manage your money during this time of uncertainty, it’s important to prioritize your financial well-being and security. These strategies can help you make the most of your savings for the long-term.

The post Why Americans Are Saving More Despite the Pandemic appeared first on Stash Learn.

Nevertheless, it’s important to try to stay within your budget even if it’s smaller. That can help you avoid the holiday debt hangover, when you rack up charges on gifts, gatherings, and other holiday-related expenses, only to face a big outstanding balance in the new year. If you’ve suffered a pay cut or job loss this year, the debt hangover could be far heftier.

Here are some suggestions for planning holiday spending without racking up debt: 

Create a list and cut it in half. It’s a tried-and-true tactic for a reason. Without a concrete plan, spending on those Amazon purchases for friends and family, and on strings of festive lights and sprigs of mistletoe, can add up quickly. 

Instead, if your income has been reduced, consider creating a holiday budget for roughly half the number of folks you originally intended to include. Have 20 people to shop for? See if you can trim down that list to 10.

While it may be difficult to only purchase gifts for one set of cousins, parents, siblings, consider batching your gifts so there are fewer to buy. Do you really need to buy a gift for your brother, wife, and three kids? Or can you come up with a gift basket with goodies that appeal to the entire family? Instead of spending $120 for a family of five, you could cut it down to, say, $40.

Consider cutting back on expenses to save for the holidays.  You may have already adjusted your budget if your household income took a hit. Aim to spend less than you earn.

But it couldn’t hurt to comb through your spending again, and see what can be cut or reduced during the last months of the year. Any savings can be reallocated toward holiday expenses. For example,  you can bring down the cost of your gas bill. According to the U.S. Department of Energy, a household can save up to 10% on its bill simply by dropping the heat 7 to 10 degrees for eight hours a day. “A 1-degree drop in temperature will typically result in 1% savings off your annual bill,” says Joelle Spear, a certified financial planner and partner with Canby Financial Advisors in Framingham, Massachusetts. 

Similarly, If you’ve already looked into cutting back on your monthly and yearly subscriptions, such as magazines, streaming services, or beauty products, don’t forget the ones renew automatically through your PayPal or your phone’s App store, suggests accredited financial counselor Brittany Davis, founder of Brittany Davis & Co. in Memphis, Tennessee.

“The worst part is that these automated payments are hidden under so many layers of clicks,” Davis says, who specializes in budget management. “Just spend the extra 10 or 20 minutes, and you could potentially save $50 extra dollars or more per month.”

Go Secret Santa. There’s no need to go berserk and buy presents for everyone you know. By taking the Secret Santa route, where your identity remains anonymous and you purchase a gift for just one person in a group, you can potentially save money. “It might seem a little old-fashioned, but pull names and buy a gift for the person you’re assigned to,” says Davis. “The fun is in the secrecy — the gift isn’t just the surprise, the gifter is a surprise as well.”

Think about a temporary side hustle. If you’ve cut back on expenses as much as you possibly can, consider looking into some seasonal work. Look for gigs that are within your realm of expertise, that don’t require a lot of equipment or supplies. Also, consider side hustles that tend to be in higher demand during the holidays and might offer higher than average pay.

Ramp Up Your Savings Now

Set up a separate savings account for holiday spending. The easiest thing you can do is to set up a separate bank account just for holiday spending, explains Davis. After all, money you don’t see is money you don’t spend. “Use the power of tech and automation to your advantage,” says Davis. “If you send the holiday money to a separate savings account, it’s more likely to not be spent. Resist the temptation to spend from it by remembering who/what it’s for.”

Auto-save for the holidays. Start putting your money in a separate savings account as soon as possible, recommends Davis. ”If you’re still gainfully employed or are side hustling, take it a step further by setting up an auto-transfer from your bank each time to receive a paycheck,” she says.

Keep it going. You can also set a stop-transfer deadline, but Davis suggests you keep it going. After all, the holidays will be back in 2021. If you need that money for other expenses, keep auto-saving, but switch it so that the money goes toward a general emergency fund. 

Saving with Stash. You can set up a partition within your Stash account specifically for holiday gifts and set a reminder for yourself to add more money to that partition when you get paid.¹ Or if you’ve set up Direct Deposit, you can automatically add money to Stash for your holiday shopping partition with each paycheck. Plus, with Stash’s Set Schedule, you can make regular, automatic investments in your portfolio so that you’re not forgetting your long-term investing. 

The post Shopping for the Holidays on One Income? Here’s How appeared first on Stash Learn.

But like creaky floorboards and noisy pipes, saving for retirement and getting out of debt aren’t as spooky as they seem. And the best way to get over your financial fears is to look them in the eye. So as you celebrate Halloween this year, we’ve got some tips to help you not to get spooked by your finances.

Cast out demons with a budget

Making a budget is probably the best way to protect yourself from past and future financial demons. If you haven’t made a budget before, now’s the time to do it. By creating a budget, you can make room for all of your expenses, your debts, and your short-term and long-term goals. 

To make a budget, you first need to establish what your monthly income is and what your monthly expenses are. Keep in mind that there are two different kinds of expenses: fixed or essential expenses that you have every month such as rent and variable or nonessential expenses that can change from month to month such as money for dining out. Additionally, you’ll probably want to make room in your budget for saving and investing. 

There are a few different kinds of budgets that you can use to build your own including the 50-30-20 budget and the zero-sum budget.

Prepare for stormy days and emergencies

Rainy days and emergencies can make your financial situation even scarier than it might already be. And if you don’t have short-term savings to help you get through those rainy days, they can be even more daunting. 

In your budget, make room for short-term savings in the form of both a rainy day fund and an emergency fund. Your rainy day fund should contain $500 to $1,000 and can help you manage if you have an unexpected expense such as home repairs or medical bills. When you have a rainy day fund, you won’t have to put those expenses on a credit card. Your rainy day fund should be liquid so that you can use that money whenever you need it.

You should also have an emergency fund with three to six months worth of expenses. So if you experience a big life change such as a layoff, you’ll have money to fall back on. You might want to keep your emergency fund in an account where it can earn interest over time.

Don’t let debt drain you

Having more debt than you can handle makes everything in your financial life more difficult. Like a vampire, credit card debt, student loan debt, and more can drain your financial resources if you don’t handle it carefully. 

But if you have more debt than you’re comfortable with, it’s not too late to get on top of it. Two strategies you might use to attack your debt are the avalanche method and the snowball method. With the avalanche method, you start by paying off your debts with the highest interest rates first and then move on to debts with lower rates. With the snowball method, you start by paying off your smallest debts first and then move on to bigger ones as you build confidence.

When you don’t have debt pulling your down, you can work towards your financial goals such as investing or buying a home. 

Don’t let retirement fall through the cracks

When you’re fighting off different financial hazards, saving for retirement might start to fall through the cracks. But saving for retirement is critical to your overall financial wellness. 

There are two main kinds of retirement accounts: 401(k)s and individual retirement accounts (IRAs). A 401(k) is usually provided through an employer and can have an employer-match benefit, whereas generally anyone can open an IRA by opening an account at a bank or some other financial institution that offers it. 

There are two different types of IRAs, Roth IRAs and traditional ones. Contributions to traditional IRAs are made on a pre-tax basis, meaning that you don’t pay taxes on that money until you withdraw from your retirement account. Contributions to a Roth IRA are made on a post-tax basis, meaning that you pay taxes on the money you contribute so that you don’t have to pay taxes on your savings once you withdraw it. 

If you haven’t started saving for retirement yet, you can open a retirement account now.¹ If you already save for retirement, consider increasing regular contributions if you’re able. 

Get ahead of future ghosts by investing 

You might think you’re not ready or financially prepared to start investing. But by starting to invest early, you can avoid more financial ghosts in the future. With Stash, you can start investing with small amounts of money whenever you’re ready. You can buy fractional shares of stocks and exchange-traded funds for as little as $1. 

Investing regularly in a diversified portfolio over the long-term can help you build savings over time.² With Stash’s Set Schedule tool, you can automate your investments so that you can invest regularly without having to even think about it.

The post This Halloween, Don’t Get Spooked by Your Finances appeared first on Stash Learn.