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You can earn 3% to 4% in your savings account. 7 smart ways to save more in 2023

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Converting your monthly bill to paperless can result in “over $1,000 a year in savings,” according to one expert.

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The #1 financial New Year’s resolution for 2023 is to increase savings, according to a recent Bank of America survey. And while it’s never been easy to set up a savings account, many savings accounts are now paying out more than they have in a decade (see the highest savings rates you can get right now here). This means that, at least on the interest side, you’ll be able to top up your balance more easily.

Here are simple steps financial professionals say you can take to save more in 2023.

1. Open a high-yield savings account

Currently, the national average annual percentage yield, or APY, for a conventional savings account is 0.30%, according to the most recent data from the Federal Deposit Insurance Corporation (FDIC). Leveraging a high-yield savings account like one of these, on the other hand, can yield an average APY of around 3% or more.

Amy Hubble, chief investment adviser at Radix Financial in Oklahoma City, said for those with savings still stuck in a low-yield bank account, now is the time to act. “Now that interest rates have risen, many online savings accounts at banks like Capital One or SoFi can offer rates in excess of 3.5%,” she said.

MaxMyInterest CEO Gary Zimmerman says it’s also critical to read the fine print attached to any of these accounts. “Make sure your money is held directly in your own name, in your own FDIC-insured savings accounts,” and Zimmerman says to “be wary of Fintech apps or cryptocurrency platforms that promise high yield; there is often a problem.

Another area to consider is fees, adds Zimmerman. “If there’s a monthly fee on a bank account, the bank doesn’t want your business.”

two. Play Smart With This Holiday Bonus

With the 2022 holiday season now behind us, Hubble says those lucky enough to have an employer that offered holiday bonuses should probably use it to boost their savings account. “Make sure a portion of any bonuses or gifts you receive go towards your savings goals so that next year you’re not again making a promise to start saving,” he says. (See the highest savings rates you can get right now here.)

3. Exceed your employer’s correspondence

A Vanguard report found the average employer match to be around 4.5%, but Hubble says that’s not necessarily enough. “Many employers will also match a portion of your contributions, but a mistake many people make is limiting their contributions to the matching amount, usually 3% to 5%,” says Hubble, adding that “all Americans need to save at least 10% of your income, regardless of your age.”

And in 2023, maxing out your contribution limits to 401(k)s and IRAs is even more profitable. Employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan can now contribute up to $22,500 a year, according to the IRS. That’s 2,000 more than it was in 2022. For IRAs, contribution limits have been increased to $6,500 from $6,000.

4. run out of paper

It might be small, but it’s an easy way to save money, so we’re including: Convert your invoice to paperless, says Bunio. Everyone from cell phone companies to insurance companies to finance companies offer discounts for those who choose not to receive paper statements.

5. Set long term goals

While financial markets largely posted losses last year, longer-term results tell a different story. Take the S&P 500, for example. Its year-to-date numbers, as measured by the SPDR S&P 500 EST Trust, also known as SPY, posted a loss of 18.04% on Dec. 26, according to Morningstar. In the last 10 years, however, the tracker had an annualized gain of 12.45%.

Jeanne Sutton, certified financial planner and managing director of Strategic Retirement Partners in Nashville, says numbers like these are exactly why it’s critical to set long-term investment goals and not focus on short-term turmoil.

“A long-term, diversified investment strategy, backed by a financial plan, is ideal for almost everyone,” says Sutton, adding that it’s also important for savers to “pay special attention to the time horizon” and “not necessarily retirement. She adds that it’s important for people to understand that “the day you plan to actually start distributing from your accounts can be very different from your actual retirement date. The same goes for younger investors saving for shorter goals, like their first home or their children’s college.”

6. Deal with your insurance coverage

Whether it’s medical, auto, disability, homeowners or other insurance, many of us make a plan and stick with it for years and years. And that means many of us are overpaying. Switch providers and you could save hundreds of dollars a year.

Even if you’re happy with your provider, it’s still worth looking into your coverage. “One should always look at what their current plans cover. What are they getting for the monthly cost,” says Nicholas Bunio, a certified financial planner with Retirement Wealth Advisors in Berwyn, Pennsylvania.

The average 40-year-old adult in 2023 will spend $477 a month on health insurance, according to a report by Money Geek. And while there’s no arguing the importance of health coverage, there’s the fact that you’re on the wrong plan, says Bunio. “For example, my parents are on Medicare,” says Bunio, adding that “their Part C plan also covers dentistry. However, they were paying $70 a month for a separate dental plan. Eliminating that extra plan saves nearly $900 a year!”

7. Make a budget that plans ‘fun along the way’

Tess Zigo, consultant at LPL, says the most critical factor of all when establishing a comprehensive spending plan is “creating your spending plan that includes having fun today, whether it’s travel or other things that are important to you.” She adds that “being responsible with money doesn’t mean you have to save pennies and just save. If you’re not having fun along the way, it defeats the purpose.”

The advice, recommendations or ratings expressed in this article are from MarketWatch Picks and have not been reviewed or endorsed by our trading partners.

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