While we all dream of hitting it big in the lottery, have you thought about what you would do if you got a bonus or a great promotion at work, an inheritance, or perhaps a tax refund? A little windfall can go a long way, especially if you already have a plan in mind to help you #Save4Success.
America Saves Week is the perfect time to talk about what to do if you find yourself with a little extra money (or a lot) in your pocket. So before you make any decisions, here are some questions to ask yourself or a trusted financial partner.
- What are the tax implications? Depending on the source of your income boost, you’ll want to understand how it will be taxed so that you know exactly how much money you have to work with.
- Should you adjust your financial plan? Is this a one-time bump or a new financial reality? Does this put you ahead of schedule? Perhaps you can pay down debt on student loans, or you are now much closer to your retirement goal. You’ll want to assess your full financial picture and determine if you need to shift anything.
Given your unique situation and goals, what’s the best way for you to save? There are a number of creative savings solutions to consider, including a CD or a Money Market account. What’s the difference?
A Money Market account is similar to a savings account. The interest rates are higher than a traditional savings account, but so are the minimum deposits. You can also make withdrawals on a Money Market account, so you have access to your money if you need it. Be sure to review your specific account’s details and understand any withdrawal limits.
CDs typically have higher interest rates, however they are less flexible than a Money Market account. A CD is a fixed rate for a fixed time. Meaning, you put a certain amount in a CD, and you will know exactly when and how much you’ll get out at the end. Learn more about the CD and Money Market options at Sandy Spring Bank here.
- What can I spend? We get it. Many people want to do a little celebratory spending when they come into some money. Before you get ahead of yourself, work through the questions above and consider what you can afford given your situation and goals. And, you’ll want to think about what you allocate to spending and savings in terms of percentages, as opposed to dollar amounts. This will help you keep the big picture in perspective.
No matter where you are in your financial journey, we’re here to be your advocate and to help you #Save4Success. To learn more about all of our saving solutions, stop by one of our convenient branches.