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Strategies to Save

What Should I Do with My Savings?

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If you’re wondering what to do with your savings, we’d like to offer some tips on money management strategies you might consider adopting.

Keep your savings in a high-interest savings account

Keeping your savings in a high-interest savings account means you can earn the highest return on your money as possible. High-interest savings accounts offer some of the best interest rates on the market, and because they are highly liquid deposit accounts, you can access your money whenever you need to.

Advantages of a high-interest savings account:

  • Low risk: If you open a high-interest savings account at an accredited institution, Federal Deposit Insurance Corp. (FDIC) insurance will protect your savings up to the legal limit if that your bank fails, so it’s a very low-risk option for your savings.
  • High rates: According to the FDIC, the average APY for traditional savings accounts is 0.09%. Meanwhile, the best high-yield savings accounts available today can have an APY as high as 2.20%.
  • Easy access: Unlike less liquid options, such as certificates of deposit (CDs), high-yield savings accounts are highly liquid, which means you can withdraw your money whenever you need to.

What to watch out for with a high-interest savings account:

  • Fees: A high-yield savings account that does not charge fees is ideal. Do the math to determine if you’d really be making more over the course of a year after factoring in any fees.
  • Not an investment: The rates of interest you get with a high-interest savings account are pretty good, but they won’t grow your money at an appreciable rate over the long term. The interest on offer is enough to beat inflation.

Use your savings to build up an emergency fund

Building an emergency fund should be one of the main goals of your financial life. That makes building an emergency fund one of the most important things you can do with your savings. An emergency fund is like a personal insurance policy that prepares you for emergencies like unemployment, serious medical problems or divorce.

The amount of money you need in an emergency fund depends on your lifestyle and financial obligations. Here are some pointers to help you think about how much to save:

Emergency fund size

Who it’s best for

Three months

People with a steady job, no dependents or a dual-income family that could rely on the income of a single person.

Six months

Individuals with dependents or those with medical conditions that could necessitate regular, lengthy hospital stays.

Nine months

Freelancers or self-employed people whose income might depend on one or two cornerstone clients.

An emergency fund that’s built with your savings should help you avoid taking on high-interest debt when you face unexpected financial emergencies. And that brings us to our next point.

Use your savings to pay off high-interest debt

If you have money saved up and you also have a significant amount of high-interest debt — either from personal loans or credit cards — use some of your savings to pay down debt. How much you allocate to paying off debt depends on your cash flow, your debt repayment plan and factors such as your investment philosophy and how much you already have in an emergency fund.

Some high-interest debt you might want to tackle first includes:

  • Payday loans: If you are currently in a payday loan cycle, using your savings to boost your payments. Ending the payday loan cycle is crucial to your financial well-being.
  • Credit cards: If the interest you are earning on your savings is lower than the amount of interest you’re paying on your credit card debt, you’re losing money every month. That’s why it’s ideal to use extra savings to start eliminating your credit card debt.
  • Personal loans: If you’ve taken out a personal loan with a high interest rate, using some of your savings to make a lump sum payment toward the principal of the loan could help you get into a more secure financial position sooner.

Maximize your retirement contributions

Putting money into retirement funds is a great way to get the most out of your savings. If your employer offers matching contributions to your 401(k), you’ll want to contribute enough to get the full match. Contributing anything less than the full matching contribution limit means you’re leaving money on the table.

After you’ve maxed out your 401(k) contributions, you don’t need to stop there. You can save additional money for retirement by making contributions to an IRA.

When choosing an IRA, you can opt for a traditional IRA or a Roth IRA, both of which offer tax advantages depending on your situation. The difference is largely in tax savings. A traditional IRA reduces your tax liabilities today, while a Roth IRA is funded with after-tax dollars, which means eligible withdrawals in retirement are tax-free. Either way, you’re getting the most out of your savings.

Start investing in the stock market

Another way to maximize your savings is to invest. The stock market can be intimidating if you’re just learning how to make money in stocks; however, online stock brokers and apps can help you decide what to do with saved money. Here are a few investment apps that might be useful:

  • Robinhood: Allows you to invest in stocks, options or exchange traded funds (ETFs) commission-free and with a $0 minimum spend.
  • Acorns: Helps invest your spare change in ETFs. Though there are no trade fees, there are monthly fees of either $1, $2 or $3.
  • Stash: Stash allows you to invest in stocks, bonds or ETFs by help you buy fractional shares. Their pricing starts at $1 monthly.

When should you tap your savings?

Tap into your savings when emergency strikes, or when you need money for big life goals, like buying a home or paying for college. In addition, you should use your savings to support your quality of life in retirement.

When you lose your job or face major medical bills

Your emergency fund is in place specifically for moments such as job loss or medical emergencies. Common sense dictates you should cut back any expenses you can while you’re in between jobs or facing a serious illness. Depending on how you lost your job, you may be eligible for unemployment benefits, but these don’t always pay for all necessary expenses. Meanwhile, health insurance seldom covers all of your medical costs. These are the right moments to tap your savings or your emergency fund to shoulder the burden.

To meet your life goals

Everyone has different goals in their life that require advance saving to achieve it. This could be aspirations of homeownership or putting yourself or your dependents through post-secondary education. Maybe you dream of starting a business or perhaps you’re trying to start a family and need funds to do that. A big life goal is a great time to use your savings rather than using loans or credit cards to fund your dreams.

When you retire

Once you’re eligible to make withdrawals from your retirement savings accounts you’ll want to start doing so to help you reduce your work hours and enjoy the benefits of that time period in your life. Depending on what your retirement goals are you might also consider using funds from other savings accounts or investments to help make your life goals in retirement a reality.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Banking

How to Open a Bank Account Online

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Opening a bank account online will require specific personal information and an electronic signature. Before you can open an account, you should consider your unique financial needs and take note of the offered account features. Here’s what you need to know about how to open a bank account online.

What do you need to open a bank account online?

It’s easy to open a bank account online, but the process will go much faster if you have all your information on hand before you get started. Here’s our list of what you may need to open your bank account:

  • Legal name: You’ll need to provide the bank with your full legal name.
  • Date of birth: This will be verified by a government-issued ID, so be accurate.
  • Address: Your bank may offer you different rates or features depending on your location. Your address will be verified before you finish the application process.
  • Social Security number: If you don’t have a Social Security number, you’ll likely have to provide an alternative tax identification number or a foreign passport. You might have to do this in person at the branch.
  • Citizenship information: If you’re not a U.S. citizen, be prepared to indicate your citizenship or if you hold dual citizenship.
  • Contact information: You’ll typically need to provide your phone number and email address. Be sure to use a secure address that you check often.
  • Employment information: Depending on the account you open, your bank might ask for verification of your annual income.
  • Driver’s license or state ID: Not every bank will ask for a copy of your driver’s license, but some do. Be prepared to have a government-issued photo ID available.
  • Co-applicant’s information: If you want to open a joint bank account, you’ll need the same information listed above for your co-applicant.
  • Signature: You might be asked to sign a signature card so the bank has a copy of your signature on file.

What kind of bank account do you need?

Once you decide to open a bank account online, the next challenge will be deciding what kind of bank account is right for your needs. Here are some options you may consider:

  • Checking account: A checking account is a useful place to keep money that you will be spending for your daily or monthly needs. You’ll want to find a checking account with low or nonexistent monthly fees that doesn’t charge you to withdraw or deposit funds. Compare checking accounts on our site to find the right one for you.
  • Savings account: A savings account is a good place to keep funds that you might want to access in the near future, such as emergency savings. Look for an account with the lowest fees and highest interest rate possible. Shop on our site to compare rates.
  • Money market account: A money market account is an account that pays interest based on what the current market rates are. These accounts typically earn a higher interest rate than a traditional savings account, especially if you are depositing a large balance. You should compare money market accounts on our site before choosing one.
  • Cash management account: A cash management account is essentially a blend between a savings account and a checking account. It offers both high interest rates and accessibility. In fact, cash management accounts are often called hybrid accounts or hybrid checking accounts.
  • Certificate of deposit: A certificate of deposit (CD) is a high-interest account where you agree to keep your funds deposited for a set period of time. You should compare CD rates before choosing one.

How do you fund a bank account online?

One major question you might have when it comes to how to open a bank account online is how to actually get money into your account once it is open. When you open a bank account online you usually have to transfer funds from an existing account in order to fund it. To do this, you’ll need the routing number and account number of your original bank account. Depending on the bank, there might be a minimum deposit required to open your account.

If your bank has branch locations, you might be able to visit a branch and make a deposit into the account, which could be helpful if you don’t have an original account to transfer money from. Some banks might also allow you to fund your account by depositing a check through photo or by completing a wire transfer.

Challenges of opening a bank account online

Opening a bank account from the comfort of your own home is typically easy, but there are instances where it may be better to visit a bank branch in person:

  • If you need in-person help: A personal touch can be helpful when it comes to managing your money. If you have a question about which bank account is right for you, it might be smart to visit a local branch and discuss your options.
  • If you’re not a U.S. citizen: It’s possible to open a U.S. bank account if you aren’t a citizen, but you might need to show extra documentation beyond the fields of the online form. In this case, it could be helpful to visit a branch.
  • If you’ve had an adverse credit event: If your bank runs a ChexSystems report that reveals a negative credit event in your past, you might not get approved to open a bank account online and should visit a location.
  • If you have thin credit history: If you don’t have any credit history, it could be hard for the bank to automatically verify your identity online. In this case, you might have to visit a brick-and-mortar location to complete the process.
  • If you’re a minor: While some banks do allow minors who are attending college to apply for a bank account online with proof of enrollment, typically people under the age of 18 will need to visit a bank with their parent or guardian to apply for a bank account in person.

Do banks check your credit when opening an account online?

Not all banks check your credit before you open a bank account online, but some do. A credit check can show your bank how well you manage your money by revealing any adverse credit events in your past.

If this is part of your bank’s process, the bank will typically access a report from ChexSystems, a reporting system that shows previous checking account history from banks or credit unions that report. This does not show information reported by credit card, personal loan or mortgage lenders. Instead, it will reveal any unpaid overdrafts or suspicious activity on your prior checking accounts.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Personal Loans

Best Places to Raise a Family With a Balanced Lifestyle

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best places to raise a family
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Raising a family has always been a challenge. But for many parents, getting their kids into a prestigious college is a long-term goal that may require them to start thinking early about how to give their children a head start. That not only means access to traditional educational opportunities but also paying for extracurricular activities parents consider important enough to go into debt over.

You can’t have it all, of course, and some of the communities with the best resources are also the most costly for families. Below we look to combine these factors to rank the best places to raise a family with a balanced lifestyle. Using data from 2016-2017, we compare 16 different metrics between the 100 biggest metro areas in the United States to pinpoint the best cities for families who want a balanced lifestyle.

Key findings

  • Utah metro areas come out looking good for families. Provo and Ogden secured the top two spots thanks to being family-friendly metro areas. Both of these metros stand out for their low average work hours, low unemployment rates and high density of families and children. In both metros, roughly 80% of households are occupied by families with over a third of the population being under 20 years old.
  • Boston comes in third and is the best of the pricey metro areas. This area has a high concentration of family-friendly establishments like museums, summer camps and grocery stores. This area also ranks in the top 30 for English proficiency, math proficiency and graduation rate, making it one of the best metro areas for education opportunities.
  • Southwestern metro areas did not fare well. Tucson, Ariz. and Albuquerque, N.M. took last and second-to-last spots respectively, while Las Vegas and Tulsa, Okla. also fell into the bottom six.
  • Florida scored poorly on the study with five metro areas in the bottom 20.


By looking at the map, it’s clear that the highest concentration of liveable cities is on the east coast, although California does put up some strong numbers for the west with six cities across the state making it into the top half of the rankings. Don’t focus exclusively on the mainland, though — Hawaii fares considerably well against the rest of the country with Honolulu ranked 20th overall.

You might notice some of the most northern states, such as Montana or North Dakota, aren’t ranked at all. That’s because their population density isn’t high enough for cities in the states to make it into the top 100.

Top 10 places to raise a family with a balanced lifestyle

Trying to determine where the best city to raise your family is? The following cities made it into the top 10 of our rankings.

1. Provo, Utah

The average work hours in Provo came out at 35 per week, with an unemployment rate of 4.3%. Families tend to be drawn to Provo, which has a family rate of 81.9%. It’s also strong when it comes to education, boasting a graduation rate of 91.6%. These results are not too surprising; Provo ranked highly in our rankings of America’s biggest boomtowns, alongside Austin, Texas.

2. Ogden, Utah

Utah makes a strong showing in the top 10 with Ogden claiming second place. Similar to Provo, people in Ogden typically work under 40 hours a week, reporting a 37.3 hour average. The numbers are similar across the board between Provo and Ogden except for the crime rate. While Provo ranks in sixth place in terms of low crime rate, Ogden ranks in 29th place.

3. Boston, Mass.

Even though Boston might sound like an expensive city, it does a lot to make life better for families. In fact, Boston ranks sixth when it comes to family-friendly businesses. It’s relatively low crime, ranking seventh — one spot behind Provo. It has an 89.7% graduation rate for students.

4. Grand Rapids, Mich.

Grand Rapids ranks 17th when it comes to home affordability and has an unemployment rate of 5.3%, ranking 17th compared to all the other cities in the data. Its family poverty rate of 7.9%, which is lower than Provo’s, who has a family poverty rate of 8.5%.

5. San Jose, Calif.

Despite an earlier study showing San Jose is one of the worst places to be making six figures, it’s still an affordable place for families with a family poverty rate of 5.7% — the lowest of all cities in the top five. It has an unemployment rate of 5.8%. The graduation rate is the lowest of all the top five cities, coming in at 84.2%.

6. Bridgeport, Conn.

Bridgeport is another city known to be difficult for workers to make a six figure income, but that doesn’t seem to stop families from thriving in the area. It has a family rate of 70%. Students in the area seem to thrive too, Bridgeport boasts a graduation rate of 91.8%.

7. Austin, Texas

Workers in Austin were among the top in the country for most hours worked, with an average of 39.7 hours per week. However, Austin also has the highest graduation rate out of all the cities in the top ten, coming in at 92.7%.

8. Minneapolis, Minn.

With a family poverty rate of 5.9%, Minneapolis ranks second best in this area out of all the cities in the top 10. It also come in 46th place in home affordability, make them one of the more financially tenable cities on the list for growing families.

9. Des Moines, Iowa

Des Moines has the most affordable homes out of all cities to make the top ten, coming in 11th place in this area. Its unemployment rate is at 4.3% while their graduation rate is comparable to Bridgeport, Conn. at 91.9%.

10. Worcester, Mass.

Similar to Boston, Worcester ranks well when it comes to family friendly businesses and activities — with 2.3%. Its crime rate also establishes it as a safer place for families, coming in 10th place.

See our complete rankings

The complete rankings show the tradeoffs between each location. Keep in mind when reviewing the data that certain criteria may be more valuable to you personally than others when deciding where to live. That’s why it’s important to look at the data as a whole and compare discrepancies between your ideal cities. To see what you’d rather live with and or what you can’t live without.

Making the most of your family’s income

No matter where you live, sound, financial stewardship is the key to providing a balanced life for your family. While some cities make this easier than others in the end it does come down to how you manage your finances. Here are some tips to start incorporating into your financial plan now regardless of your location.

1. Use an app to manage your budget

The days of keeping cash in envelopes or using a spreadsheet to budget are long behind us. Nowadays there are many budgeting apps you can use to manage your family’s money.

For example, if you are still in love with the envelope method, consider an app like Goodbudget. It allows you to replicate the concept from your smartphone. For a more in-depth approach, try a platform such as Mint that allows you to track your income and expenses and will send you alerts throughout the month to help you reach your savings goals.

2. Consolidate your debt

If you are facing debt as a family, consider taking out a personal loan to consolidate your debt. Debt consolidation can help you pay less interest over time, if you qualify for a lower interest rate on the new loan. Plus, it simplifies your finances because instead of having to make various payments you’ll only have to focus on one payment, once a month.

Compare personal loans online to make sure you’re getting your best rate before you sign.

3. Consider your investment options

If you have savings each month, even if it is a small amount, you might want to start considering how to invest your surplus. After creating an emergency fund with cash you can access quickly if a worst case scenario does arise begin to decide how you’ll invest the extra. This could take the form of a daily interest savings account or something more aggressive.

Methodology

In order to find the best places to raise a family with a balanced lifestyle, we compared data for the top 100 metro areas by population. Specifically, we looked at the following 16 metrics:

  1. Average hours worked per week (2017 ACS)
  2. Unemployment rate (2017 ACS)
  3. Median housing costs as a percent of household income (2017 ACS)
  4. Family poverty rate (2017 ACS)
  5. Family friendly business rate (2016 County Business Patterns Survey)
  6. Education opportunity rate (2016 Business Patterns Survey)
  7. Math proficiency rate (Data comes from the US Department of Education and is for 2016-2017 School Year)
  8. English proficiency rate ((Data comes from the US Department of Education and is for 2016-2017 School Year)
  9. Graduation rate (Data comes from the US Department of Education and is for 2016-2017 School Year)
  10. 5-year change in median home values (2017 ACS)
  11. Family household rate (2017 ACS)
  12. Percent of population under 20 years old (2017 ACS)
  13. Home affordability ratio (2017 ACS)
  14. Crime rate per 100,000 residents (Data comes from the FBI and is for 2017)
  15. Per pupil funding as a percent of local income (2017 ACS)

Each metric was scored relative to highest and lowest values across all metros. For each metric, these scores were averaged for a highest possible category score of 100 and a lowest of 0. Family friendly business rate, education opportunity rate, math proficiency rate and english proficiency rate were all given half weight while every other metric was given full weight. The highest possible final score was 100 and the lowest was 0.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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