Expert Ways to Boost Your Savings

About the Episode

How can you start making your money work harder for you? According to Forbes Advisor 2024 savings trends, almost half of the people surveyed have opened a high yield savings account or a CD. However, that means that still nearly half have not taken advantage of an interest-bearing account for their savings. Today, Addition Financial’s Dan Sheerin will guide us through how we can all work to boost our savings – from account types to strategies! 

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Types of Savings Accounts


Cristina asks Question 1: “So let's start from the basics. Can you tell us the difference between all the different types of savings accounts?”

Dan responds: “A basic savings account is going to be probably your lowest yielding account. It's a very simple account – you put some money in there, the credit union uses it for lending and gives you a small piece in return. After that, you're going to see something like a money market account, which is going to be a tiered account. So, you put maybe $10,000, $25,000, $50,000 and then $100,000. With each one of those tiers, the amount to make it to that tier and pay you a little bit of a higher rate. Then we have things like certificates of deposit, which are termed deposits. So, you could open a CD for a year, two years, three years, or up to five years. Again, the longer that you're investing it, usually the more money you're going to earn in interest.”

Dan follows up: “Then we have things like high yield savings accounts. We have a couple of those that we're doing right now at Addition Financial – one is called the Savings Plus and the other is called Growth Plus. The Savings Plus is more of that traditional savings account, but we wanted to create something for new savers. So we put a little bit of a higher interest rate on it, but it's got a cap on how much money you can save in it. Then we have a tiered account, which is again that money market, but this is for folks that are asking for higher rates or higher balances.” 

Dan follows up: “Finally, you have things like IRAs and retirement accounts. You really want to get a financial planner or financial advisor involved with those, but we do have products like that at Addition Financial. If you have a 401K or some sort of pension, these are alternate accounts where you can save a little bit extra. They say to diversify your savings, so this gives you other avenues to be able to save while you're still functioning in the regular accounts.”


Crisitna asks Question 2: “A money market and a savings account – they’re liquid. I can go in and out. But with a CD you're locked in, right?”

Dan responds: “That’s correct, if you close a CD before the term, you would pay a penalty for taking the money out. You're saying to the financial institution, I'm going to give you this $10,000 for five years. What are you going to give me back for it?”

Saving for Beginners 


Randy asks Question 3: “Dan in your experience, where’s the best place to start for someone who wants to grow savings?”

Dan responds: “At Addition Financial, we start with accounts for children. We have accounts where kids that can start, you know, you're in high school, you get your first job. We want you to grow in your savings skill set as you grow as a person. So, basic savings is always great. As soon as you get to that first tier of the money market, move it there. You know, some folks just have different types of life. So it really depends on what you're looking to do with your savings.”

Saving for Retirement 


Cristina asks Question 4: “What's the difference between a 401k and a Roth IRA?”

Dan responds: “A 401K is a pre-tax savings account that you would enter into with your employer. And so you get $1,000 in your paycheck, they’ll take $200 of that. What normally happens with a 401K is that your employer will say we will give you a certain percentage and then we will match you for an additional percentage. Say your employer says, 'we'll give you 3% of your annual salary into your 401K as our contribution, and then we'll match you up to an additional 5%’. If you go in with that 5%, they match you to 5% plus their 3%, you’re at 13% of your annual salary being put into a savings account for you. This is the same sort of thing as the CD. This is intended for retirement. So if you start using the money early, there are penalties that you have to pay.”

Dan follows up: “Now secondarily, we have what are called IRA individual retirement accounts, and there are two different types of individual retirement accounts. There's what's called a traditional and there's what's called a Roth. So when you think about a traditional, think about it as you get paid in your check. At the end of the year when you file your taxes, if you put $5,000 into a traditional IRA, you get a tax break because you've put money aside for retirement. Then, when you draw the money out, once you get to the retirement age and you start using the funds, it's considered income that you're going to pay taxes on at that point. So, you're getting the tax break on the front end, but you're going to pay taxes on the back end. The Roth IRA is the opposite. You've already paid your taxes on your paycheck and now you're putting the money into the Roth IRA. Then when it comes time to retire and you want to start doing withdrawals, that money is not taxed because you already paid the taxes on the front end. So that's tax free money coming out on the back end.”

Balancing Savings and Debt


Randy asks Question 5: “Do you have any advice for balancing paying off debt and saving money at the same time?”

Dan responds: “I think the first thing you always want to do is have an emergency fund – generally $1000 to $1500. So if your radiator goes out you don't have to swipe your credit card and go into debt. Then, once you get through paying your debt off, you want to start saving a six month safety net. So, if anything ever happens, you have to take some time off of work or something like that, you have enough money to be able to absorb that and deal with it without having to go into debt. You want to be very careful about the debt you're using and how efficiently you're making sure that you're paying it off so that you can continue to save.”

Account Recommendations


Cristina asks Question 6: “We kicked off the podcast and you told us all about these different savings products – the high yield savings, a CD, all those things. Who would benefit most from each of those different products?”

Dan responds: “I think the basic savings and the high yield Savings Plus accounts are great for starting to save. If you have children, if you're starting your first job, those sorts of things where you're not quite in the thousands of dollars yet. I think those are going to be great for you to accelerate your savings and really start to help you focus on growing. I also think it's important to talk about the idea of something like, at Addition Financial, we have what's called AddsUp. So if you spend $1.18, that other $0.82 of that second dollar automatically gets shifted to your savings account to start saving.”

Dan follows up: “The money market accounts would be for more mature savers. Once you get into that 5, 10, 15, 20, $25,000 range where you're starting to hit those second and third tiers, that's where those money markets are really going to play out. because again, the percentage rate that you're going to earn is directly tied to the amount of money that you have into the account.”

Dan follows up: “I think when you talk about the retirement plans, the retirement accounts, the IRAs, CDs, those are going to be where you’ve got your home almost paid off and no real debt outside of that. You’re really just trying to save as much money as possible to prepare for retirement. And you know that stage of life, that's where those CDs are going to come in. You can do what's called CD Laddering.”


Making It Count Essentials


Randy asks Quick Question 1: “Do you believe there’s a specific rule we should be following? I've always heard of the 50/30/20 rule.”

Dan responds: “I think there's probably a good formula for each person. I think getting a professional involved is the best way to do it. Everybody's situation is different. Some of us have families that have left us money to get started in life. So, you have a different foundation that you're building off than someone like myself, who started working at 14 and has been grinding my whole life. We're going to have different scenarios as different people. I would always recommend sitting down and talking to a professional. At Addition Financial, you can come and speak to somebody for free. You don't have to do anything, it’s a free service we offer. So you come in, you explain what your goals are, what your pay looks like, what you're saving now, and they'll help you build a bridge to get there.”

Dan follows up: “I think there are definitely some good rules of thumb, like making sure you're putting 10% away, saving for your retirement, making sure that you're doing the things for later. It’s kind of needs vs. wants.”


Cristina asks Quick Question 2: “What's the biggest savings misconception that you hear?”

Dan responds:”’I can always start later.’ If you're 20, if you're 25 years old, start saving for retirement right now. Right now, put something away. It doesn't matter how much it is. I know you're just starting your career. I know it seems like a lot when you don't get a lot in your paycheck. Start saving now.”


Randy asks Quick Question 3: “What are some of your thoughts on automating savings?”

Dan responds: “Set it and forget it. You know set it and get yourself that AddsUp product where all the change that you're not spending is going in there. Put a little bit from your payroll. Just get it automated as much as you possibly can. Again, if you have a 401K at your job, I know you may not be earning a lot of money right now. It might seem like this is my movie-on-a-Friday-night fund. Get as much money into that 401K as you possibly can. Max out your contributions and figure out the match.”


Cristina asks Quick Question 4: “How often should we audit and adjust our savings plan?”

Dan responds: “It’s always good to keep an eye on it. Any time you have a change in career or a change in life. Let's say you get out of college and you start a new job, go talk to somebody. Three years later, you get a promotion and now you're making 15% more than you were. Go talk to somebody. Get married? Go talk to somebody. You have a kid? Go talk to somebody. Any time life is changing on you, I think you should always reassess where you're at and what you're looking to accomplish, so you can get there effectively.”


In this episode, Cristina and Randy shared a money management tips and savings strategies for every budget and age guide. Check it out for some great ways to boost your savings, no matter what financial life stage you’re in!

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