Why is everyone talking about a High-Yield Savings Account?

Author

JC Rodriguez
April 24, 2024

Good morning beautiful people!
Long time no talk, recently I’ve been thinking about what makes this newsletter different than any other finance newsletter.

Usually finance influencers will talk about “how to save money” OR “how to make more money.” But no one really talks about the balance between both.

The combination of frugal living AND increasing my income is the real reason for my current state of financial peace with my wife. It wasn’t one or the other. So that’s exactly what I’m going to share with you guys. Each day we’re going to learn new ways to save and new ways to increase income; all while motivating each other! We are the FRUGAL RICH.

DEFINITION
Everyone talks about the High-Yield Savings Account

  • Traditional savings accounts have an average interest rate of 0.46%. Which means, if you put $1,000 into a typical account, over the course of an entire year you would earn… $4.60. That’s barely enough money to take someone on a date to the Costco food court.

  • A High Yield Savings Accounts offers significantly higher interest rates than traditional savings accounts. My HYSA is currently at 5.05%. Meaning if I put $1,000 into it, I’ll earn $50.50 by end of the year just by sitting in there. That’s a fancy sushi date right there.

  • Of course, the more money you put in, the higher the amount. It’s just a way better way to save; so you can beat the inflation that’s happening.

PRACTICAL ADVICE
How much to put in there?

  • I would put your whole emergency fund in there.

  • A full emergency fund should cover 3-6 months of your expenses. So if it your expenses each month is $3,000. Then you should have $9,000-$18,000 in there.

  • To do this, my wife and I automated our checking account to send $2,000 into our HYSA each month. And since February, we’ve had a fully funded emergency fund!

HELPFUL RESOURCES
My actual HYSA

  • I use CIT Bank

  • Check it out! I get zero commission for you using this lol

OUR COMMUNITY
What are your questions? Or share a win!

  • Reply to this email with any personal finance question you have, or share with me any wins in your life! (I’ll respond to your questions anonymously in future emails)