How to Assess Your Savings

A savings account at its most basic level is what it sounds like: a place to save money. What’s the best savings plan to have?  For most people, the most important savings account is their emergency savings account. You might also have a 401K account for retirement or 529 account for your kid’s college education.

When it comes to saving money, many people take a sporadic approach where they put money away when they can, if they can. The problem with this approach is that life happens and it’s a very easy thing to forget to do.

Don’t wait until an emergency to look at your savings account. Face the numbers regularly, starting today.

List out all of your savings accounts

The best savings plan begins with an honest assessment of your full financial picture. — like what you did with your debts. Start by getting organized with your savings. On a piece of paper or digital spreadsheet, list out all of your savings accounts. This includes the savings account that may be tied to your checking account, any retirement accounts that you started with your current or past employers, or any college funds for your kids.

If you like having worksheets to help you get organized, we’ve put together something you can print out or replicate on a spreadsheet.

GET THE WORKSHEET HERE

Spell out the terms

Next to each savings account, write down the current balance and the interest rate or rate of return. You should be able to find this information on your account statements.

Next, write down how much you contribute a month. If it’s not a set amount and sporadic, calculate your average monthly contribution for the last year. Just add up the total number of contributions from January to December, then divide by 12.

With accounts that have age or time restrictions on when you can access the funds, write that down under the “terms” column. This is most common with Certificates of Deposits (CDs), 401K accounts and 529 accounts. 

Questions to consider

Now that all your savings and terms have been listed out, ask yourself the following. Of all your savings accounts, which one is getting the biggest contribution from your paycheck each month?

Next, look at your emergency fund. Do you have enough money to cover three-to-six months worth of expenses if you experience financial hardship? If not, is funding it being prioritized among all your savings accounts?

Do you currently keep your emergency fund separate from other savings accounts? If it’s all lumped together, you may want to consider creating separate accounts. That way, you don’t get tempted to dip into your emergency fund for non-emergencies.

Creating the best savings plan for you doesn’t have to be complicated. But just take note of these insights for now. They’ll come into play in the coming days when we share some creative savings ideas and help you figure out the best way to build up your emergency fund and other savings accounts.

Get started with our worksheet

Click here to download the PDF to help you organize your savings.

How to join our 31-day #FaceTheNumbers challenge

We’ll be posting each day’s activity on Instagram, Facebook and at meettally.com/facethenumbers. Follow along to learn how you can #TallyItUp and make 2022 the year you get out of credit card debt for good.

We hope you’ll join us and start the new year with the Tally crew!