Here’s what to watch


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With July 1 just two days away, we’re almost officially halfway through 2021.

It’s always a good idea to check your finances after the first half of the year to see where you are at, but it is even more crucial to do so in 2021 due to the impact of the pandemic on our finances.

You might have exhausted your emergency fund last year if you were one of the millions who lost their jobs, or maybe the spike in spending induced by the reopening is hitting your wallet even harder this summer. . Maybe the pandemic has changed your financial priorities and you want to speed up your debt repayment.

These three areas of your personal finances – emergency funds, expenses, and debt – are what Elisabeth Kozack, managing director of Marcus by Goldman Sachs, says individuals should pay attention to during their mid-year financial review.

Your emergency fund

An emergency fund is basically a savings account that you set aside to cover any unforeseen expenses, such as a surprise medical bill, sudden car maintenance, or home repair. By having an emergency fund to lean on, you are financially prepared to deal with any trouble, so you don’t have to withdraw funds from your checking account or long-term investments.

Mid-year is a good time to reassess your emergency fund amount, especially if you’ve been drawing on it in the past year and a half.

Kozack suggests keeping the following best practices in mind when considering your money:

  • First, think about your budget and where you can reallocate funds to savings.
  • From there, schedule an automatic transfer to your savings account every time you receive a payment that stays within your budget, even if it’s $ 25 per month.
  • Next, make sure your money is running smart. Keeping your emergency fund in a high yield savings account can be a great option for earning interest while still having access to your money.
  • Finally, think about when you might receive additional income, such as a quarterly sales bonus, and consider increasing your emergency fund.

Select has analyzed and compared dozens of savings accounts offered by online and traditional banks. We’ve found that the best high yield savings accounts have an above average APY for all clients (regardless of your balance), are FDIC insured, have no monthly maintenance fees, and have no monthly maintenance requirements. low (or non-existent) minimum balance:

Read our methodology below for more information on our best-of selection.

How much should go into your emergency fund?

The size of your emergency fund depends largely on your personal circumstances: your monthly expenses and bills, your income, and the size of your family, says Kozack. The general rule is to have three to six months of living expenses in your emergency fund, but even setting aside a few hundred dollars a month is a good goal to have when you can’t save up to three to four. six months of spending.

Economist Emily Gallagher, assistant professor of finance at the University of Colorado Boulder, suggests an emergency savings goal of $ 2,467, or one month’s income, for low-income savers (U.S. households earning less of 200% of the poverty line, or about 30% of the US labor force) in his 2019 co-authored report, “Rules of Thumb in Household Savings Decisions”.

Gallagher argues that those who have saved a minimum amount of $ 2,467 have a lower likelihood of financial hardship and are less likely to fall behind in paying rent, bills, or medical care in the future.

Your expenses

To make sure you stay in control of your finances, Kozack suggests reassessing where your money is going as the country continues to reopen.

“It’s time to ask, ‘Is this a need or a want – and where can I put this extra money?’,” She said.

Now that people are able to travel and see their friends and family more than they could a year ago, it is quite normal that your lifestyle “wants” to increase. By checking your spending mid-year, you can see how your spending habits are changing and how much more (or less) money is coming out of your bank account as we continue into the summer.

To find other areas to reduce so you can enjoy a return to normalcy, consider opting out of recurring expenses that you added during quarantine that you may no longer need, Kozack adds. These expenses can include virtual fitness classes or streaming subscriptions – diverting the money saved on canceling these services to building your emergency fund or paying down debt.

Use cash back or a travel credit card to pay for your summer trip

Cash back credit cards reward you for your purchases by putting money back in your wallet. New Citi Custom Cash℠ cardholders with no annual fee can earn 5% cash back on their highest spending category, plus a $ 200 welcome bonus after spending $ 750 on purchases over the three first months of opening the account. The bonus offer will be filled as 20,000 Thanks® Points, which can be redeemed for $ 200 cash back.

And if you book a lot of trips, hurry up to sign up for the best 100,000 Chase Sapphire Preferred® Card Points Welcome Bonus you can earn after spending $ 4,000 on purchases in the first three months after the trip. opening of the account.

Your debt management

More than a quarter of Americans (28%) identify paying down debt in the next six months as their top financial priority, according to the recent Marcus by Goldman Sachs consumer sentiment study.

If the pandemic has made you prioritize paying off your debt, now is the time to check your progress or your strategy for doing so.

“It’s important to consider two things when prioritizing debt in your payments strategy,” says Kozack. First, know that not all debt is equal since different loans have different interest rates, and second, consider that everyone needs some type of emergency fund.

Prioritize paying off higher interest debt, like credit card debt, because it costs you more the longer it goes unpaid. And, before you speed up your debt repayment, make sure you already have an emergency fund set aside. An unexpected financial emergency will eventually increase your debt and hamper your efforts to pay it off, says Kozack.

A debt consolidation loan is useful for paying off existing debt on multiple accounts, including credit cards, student loans, and other installment loans.

With an Upstart personal loan, applicants who have poor credit history and no credit score can apply. And if you have a credit score, Upstart is open to borrowers with fair credit (minimum score of 600).

Our methodology

To determine which high-yield savings accounts offer the best return on investment, Select analyzed dozens of US savings accounts offered by online and traditional banks, including major credit unions. We lowered our ranking by only considering savings accounts that offer an above-average APY, no monthly maintenance fees, and low (or no) minimum balance requirements.

While the accounts we’ve chosen in this article consistently rank among the highest APY rates, we’ve also compared each savings account on a range of features, including account usability and accessibility, as well as factors such as insurance policies and customer reviews. when available. We also took into account the users’ deposit options and the compound frequency of each account.

All accounts included in this list are insured by the FDIC up to $ 250,000. Note that the rates and fee structures for high yield savings accounts are not guaranteed forever; they are subject to change without notice and they often fluctuate with the Fed rate. Your income depends on the associated fees and the balance in your high yield savings account. To open an account, most banks and institutions require a new money deposit, which means you cannot transfer money that you already had in an account at that bank.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.


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