In this 2 Minute Q&A Tuesday, we’re going over how low can interest rates go and if a high-yield savings account is still worth it. With all the money moves being made from the Feds, from low-interest rates to home sales soaring. You might wonder if it’s a good time to stop saving and start buying? These are definitely interesting times for savers, buyers, and investors. But let’s break down how the Feds are destroying high-yield savings accounts and how this is affecting your money moves.
The first question I would ask myself is if I am ready to stop saving and ready to buy. Understanding why you’re saving will make this very clear for most. If your saving for an emergency fund or buying a home, you know exactly how much you need to save. But if you’re not ready, and you’re feeling pressure to stop saving and start buying, this might be due to low-interest rates. At that point, you should be concerned if your money moves are based on government praise or on the goals you’ve set. The best way to grasp this pressure is to understand why the Feds are lowering interest rates.
Understanding the Feds Money Moves
Like most of you, I have been glued to the news trying to keep up with all money move the Feds are making. Why? Because every move is meant for an economic effect, and I wonder if it will go a positively or negatively. To help clarify why the Feds are moving the way they do, you have to understand their priority. They’re responsible for the macro money moves of the country, which moves the economy of the world. Since we live in a consumerism economy, it’s important that the country and its citizens continue to spend money.
Now, this is fine on a macro level, but when you look at it on a micro-level it’s only sustainable if your personal finances can handle it. This makes it clear that the Feds aren’t prioritizing our personal finances if it disturbs their big picture system. They have disclaimers about having emergency savings but know that their moves psychologically challenges us to stop saving. We have to get comfortable seeing and understanding these moves and not badly position ourselves financially. No matter if interest rates go up or down we still need our personal financial safety net.
Save with Purpose or Not at All
I am not anti-government or the Feds, I am just pro you. If you hit your emergency fund goal or your Christmas savings goals early then, hey you achieved your goals. But if you’re postponing your savings goals only because of low-interest rates, then you probably we’re serious about your goals. Or even worst you’re not sure why you were saving in a high-yield saving account other than getting a good interest rate. This is something that happens when you’re saving without purpose or saving with second intentions. The high-interest rates are just the caramel drizzle on your favorite frappuccino, it’s not what makes or breaks your frap.
The goal with the savings accounts of the High-5 Banking Method is to help you uncover and create a game plan for your goals. That’s why it’s so important to be clear on why you’re saving and making sure it’s something worth saving for. Because If you don’t find purpose in why you’re saving, you probably won’t save. So, remember you’re not just saving for high-yield savings account for interest rates, you’re saving for your emergency fund, your long-term or short-term goals. These goals will vary from person to person, so make sure you know how much YOU need to save for your goals.
Stop Chasing Interest Rates
So now that we’re clearly seeing what the Feds are doing and will continue to do with interest rates. You have to decide what’s the game plan with your savings accounts since they’re all going to stay on rocky territory. For me, I seriously don’t have the time nor energy to chase interest rates from bank to bank. If the interest rates go down in one bank, next week the other banks will probably fall as well. This is something that I’ve experienced with my own high-yield savings accounts for the past few years. I’m telling your guys that I am right there with you and I know it’s not fun to see.
But for my family, we’ve decided that interest rate chasing isn’t worth it. We instead focused on why we’re saving and if the Feds want to go force us to spend, we will still save. Why? Because we know what we’re saving for and we won’t pressured or tricked out of our dreams. I am not scared to save with purpose anymore. Knowing what my money is for is far more important to me than chasing trends or interest rates. Your peace of mind is worth it sis.
Closing Thoughts
I want to leave you guys with one last tip when it comes to banking. If you’re not satisfied with your customer service, ATM availability, or bank fees. These are the types of reasons to leave a bank and make the switch to a bank that works with your lifestyle. Interest rate chasing, Fed approval chasing, or anything that positions you less than isn’t worth it. Make sure you know what you want and be willing to fight for that, even if you don’t get rewarded. Because the real things in life aren’t always wrapped in a big red bow.
