New year, more money: Your 4-week money bootcamp starts today

The stories, strategies, and tips you need to manage your money.
Personal Finance

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Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.

Here's what: It's time to get your money right, starting with your savings

Welcome to Personal Finance Insider's New Year's tune-up, a four-part series to help you set yourself up to build wealth in 2023 and beyond.

Over the next four weeks, we'll fine-tune your savings and investing strategies and protect your wealth for the next generation, offering specific actions to take each week to shore up your finances.

First up: We're talking savings.

To weather life's ups and downs — including a recession or job loss — a healthy savings account is critical. Your emergency fund will be there to support you if you get laid off, your self-employment income takes a sudden dip, or a major expense, like a car repair, pops up.

Saving money is also key to covering all your wants and needs, like paying medical bills, buying a home, or taking a vacation. 

If you have debt, you may feel pressure — internal and external — to focus on paying it off before you turn your attention to your savings. In fact, you may think this newsletter doesn't apply to you because you have debt and therefore no intention of prioritizing your savings. 

But financial planner Pamela Capalad of Brunch & Budget urges another approach.

"When you don't have savings and an unexpected expense comes up, the expense goes right on the credit card, and you're back in the same debt cycle you were trying to get out of," she wrote for Insider in 2022. "Having money in savings is the financial equivalent of putting on your own oxygen mask first."

So as a first step on this tune-up journey, focus on your savings.

Your action items

Open a high-yield savings account

If you're starting from scratch with your savings, your first action item is opening up a high-yield savings account. These accounts are different from typical bank savings accounts — they offer a yield (aka money in your pocket) on your savings. Right now, you can earn 3% interest or more with some of these accounts. 

See our picks for the best high-yield savings accounts

If you have a savings account with your regular brick-and-mortar bank, it's likely you're earning pennies on the dollar (if that much). So open your shiny new high-yield account ASAP, then move on to the next action item.

Set up auto-transfers

To be successful at saving money, the process of saving has to be two things: 1) easy, and 2) a habit. Instead of saving a little bit here and there whenever you think about it, or putting away whatever is "left over" at the end of the month, try setting up auto-transfers through your bank's website instead. 

Choose a time interval — maybe it's once a month, or every paycheck — and direct a percentage of your income into your savings account. This could be $20 or $200 or $2,000. It doesn't matter. The point is you're paying your future self now by sending that money to savings before you can spend it from your checking account.

If you're just starting your savings journey, you can stop here — you're doing great. If you already have some savings but want to level up, keep scrolling.

Increase your savings rate

You already know you need to save to reach your financial goals. But sometimes, we forget to increase that amount as our income rises. So if you've gotten a raise recently or find you have some room in your budget, consider increasing your savings rate — and make it a percentage of your income rather than a dollar amount, so your savings don't stagnate.

If you already have a healthy emergency fund and a good savings habit, try opening a new high-yield savings account (or creating a new bucket within your existing high-yield savings account) and tucking a small amount — like $20 per paycheck — into that account for something you really want. 

Maybe it's a bucket-list trip, a new piece of furniture that will make your life more comfortable, or a course or conference that will help you advance in your career. You'll be surprised by how much is in that account at the end of the year.

Hoping your 2023 is off to a peaceful start. See you next week when we'll tackle debt.

— The Personal Finance Insider team

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