How Much Money Do You Really Need in Your Savings Account?
Bank savings accounts don't exactly earn you a huge return these days: in fact, most big banks are offering a fraction of a percent in interest on their savings accounts. However, savings accounts do serve an important purpose as a safety net. Should you run into some sort of crisis (losing your job, injuring yourself seriously and expensively, suffering a car breakdown, or so on) a well-funded savings account can get you through it while avoiding the drawbacks of going into debt. But how do you qualify "well-funded" in terms of a saving account?
Saving the bare minimum
The Federal Reserve Bank of New York holds a monthly Survey of Consumer Expectations in which it asks consumers various questions to determine their financial situation and expectations. One question on the survey asks whether the consumer would be able to come up with $2000 in cash if necessary. That's because the Federal Reserve Bank has determined that this is the average amount a consumer will need to resolve a crisis. Thus, $2000 is the minimum funding goal you should aim for with your savings account. That will be enough to get you through one average-sized crisis. Sadly, in the February 2017 edition of this survey only about 67% of Americans said they'd be able to scrape up that much money.
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Going beyond the minimum
Having enough in savings to fund a single crisis is extremely helpful, but it may not be enough for safety. Some common crises may go well beyond the need for $2000. For example, if the primary breadwinner in your family loses his job and is out of work for a few months, $2000 wouldn't begin to cover what you'd need in order to get by. What's more, crises often seem to come in bunches; the car breaks down and then you get sick the very next week. If your savings account is only funded enough to take care of one crisis and you get hit by two in rapid succession, you'll be in trouble.
A better savings goal
How much you really need in your savings account depends on your lifestyle and circumstances. If you're single, have a stable job, and you have parents or other family members who can be counted on to help out in a pinch, you won't need to save as much as someone who is married with several young kids and doesn't have anyone else around for financial support. In the former situation, saving enough to get you through three months without any other sources of income should be enough. If your living situation is more precarious or other people are depending on you, aim for 6 to 12 months' worth of expenses in your savings account.
The risk of saving too much
On the other hand, it's possible to overfund a savings account. A highly risk-averse saver may choose to keep putting money into a bank savings account rather than directing it into more volatile assets, such as stocks. Unfortunately, that kind of investing strategy will end up costing this cautious saver money over the long term.
You see, historically, the average rate of inflation in the US is around 3%. That means that any long-term saving and investing strategy needs to realistically plan for a return of at least 3% just to keep from losing money. And while there have been periods when interest rates rose to the point where you could indeed get more than a 3% return on a savings account, these high-interest rate environments usually go hand-in-hand with high inflation rates. Thus, regardless of the base interest rate you're getting now, bank savings accounts will rarely if ever allow you to beat inflation, let alone make a reasonable return compared to your other options.
A good savings strategy with a caveat
Saving money is a high financial priority, but there's one financial priority that's even higher: getting rid of high-interest debt. The rationale is similar to the previous argument about inflation; if you're stuck with a debt on which you're paying 15% interest, then those interest payments will wipe out any possible returns from even the nicest investments. Thus, step one in a savings plan is to pay off any credit card or other high-interest debt. Once you've done so, the next step is to take the money you've been applying to credit card payments and drop it into your savings account instead until you've got a few months' worth of expenses covered. When your savings account balance hits the goal you set for yourself, you can start funneling that money into a higher return investment -- typically the best choice at this point is some form of retirement savings account, since the investments in these accounts can grow unburdened by taxes. And with your savings account there to protect you in case of emergency, you won't risk falling back into expensive debt in the future.
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Report: Durant willing to take less money to keep Warriors core intact
Report: Durant willing to take less money to keep Warriors core intactDating-site con man looking to steal women's money, not their hearts, police warn
A con man accused of scamming women he meets on dating sites around the country now has a warrant out for his arrest in North Texas.
His name is Derek Alldred, though he also goes by Rich Tailor or Richard Peterson, The Colony police Officer Kyle Koiner said in a Facebook post.
Alldred has targeted women in Minnesota, California and Arizona and also has a warrant out in The Colony for his arrest in a credit or debit card abuse case, police said.
He's been on the run since December, WFAA-TV (Channel 8) reported.
Alldred has been known to have many different looks and has posed as a doctor, lawyer and military personnel.
"He has many pictures, many different faces," Koiner said. "He likes to get on dating sites, meet women and then scam them out of their money."
One Minnesota woman identified as Linda told KARE-TV that she met Alldred on OurTime.com. She said Alldred, who used a different name with her, told her he was finishing a Ph.D in political science and was a reservist in the Navy.
He had the gear, too. Alldred left a Navy SEAL uniform, a Purple Heart and a Silver Star at Linda's house.
At the same time, Alldred was swindling another woman identified as Missi, KARE reported. One day she got suspicious and looked through his wallet and found two of Linda's credit cards, the station said.
She quickly reached out to Linda who estimates Alldred scammed her out of nearly $200,000 — her life savings.
"I feel like I allowed him to come in and take my son's college money away, take my future away," she told KARE.
Alldred's list of scams is long. One Sacramento woman married him and ended up losing her house to foreclosure. She claims he spent the money he said was going toward bills on other things.
Alldred has at least 10 convictions for felonies and misdemeanors and has spent time in jail in California, Minnesota and Arizona. Until recently, he had not been charged in the scams women accused him of, KARE reported.
Police have encouraged anyone with information about Alldred's whereabouts to contact the department.
"Don't be embarrassed," Koiner told WFAA. "Things happen, and things can be fixed."
Online dating scams are nothing new.
The date was set for Stephanie Hoskins to marry Brett Goodman, a man she thought was an oilman and the son of well-to-do Australian ranchers. She now believes he was trying to get U.S. residency.
The Collin County resident met Goodman, whose real name is Brett Joseph, on the dating site Plenty of Fish. After learning that Joseph had taken advantage of her and several other women, she broke it off.
In 2015, a U.S. District judge sentenced Oluwaseun Oyesanya, a Canadian man, to two years in prison for carrying out a "romance" scam on the dating website tagged.com.
He used the name "Trisha Jones" and once a relationship started, he would trick the men into thinking he was in trouble in a foreign country and needed money to be wired there, according to court records.
A Dallas man who thought he was in a relationship with Jones began helping her collect the money. He told a federal agent he thought Jones was sending him money from her clients so he could send it to her in Nigeria.
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