When I was a senior in college, I fell for a golfer (we will call him Bogey because I gave him one too many shots). We met at The Last Resort, had a glorious DFMO, and for the next few months I would get a “u up” text from him around 1am every Thursday. He was a real class act.
For the first few weeks, I was just excited to hear from Bogey and would promptly respond regardless of the time. But as the weeks turned into months, I started to develop actual feelings and even asked him to my sorority formal to which he responded “nah.”
Needless to say, it wasn’t a match made in heaven but I continued to respond to his late night messages with the hope that someday he might change. I’d complain to everyone about him, but just couldn’t figure out how to end it till my friend said, “Kelsey, he literally has no interest. Can you please move on?”
And that leads me to today’s topic - interest. If there is none, why are you wasting your time?
WTF Are You Talking About?
Interest is important. Whether you're talking to a new potential suitor or opening up a savings account, you need to think about interest, because without it, you’re just wasting your time. Trust me, I know it’s hard to cut ties with a toxic person - I talked to Bogey for 3 months (ew) but I’m here to be your blunt friend and tell you to just break up with no interest.
What is Interest?
Interest is the cost of borrowing money. If you’re lending money, you get paid interest for your loan. If you’re borrowing money, you pay interest on the amount you borrowed. For this article, I am going to focus on interest on balances (the money you loan to your bank as a deposit), not debt. Debt will be for another day when I can handle the emotional baggage.
How does it work?
When you deposit money in a savings account, you are essentially loaning the money to your bank. They pay you interest on the money, because they use the deposited $$ to lend money to other customers.
How do I get interest?
Find the right partner - I liked Bogey even though he was completely wrong for me. The classic “play hard to get” had me hooked from the start. You may have found yourself in a similar relationship with your savings account. But rather than stumbling into their arms at a dive bar, you probably got hooked when you were 12 and your parents brought you to a local bank to deposit your first communion money. That first account might not and probably should not be your partner for life (thanks for the lollipops though!!).
Hoe for Yield - If it’s not already painfully clear, Bogey had 0% interest in me. You might find yourself in similar situations with your savings account. My first savings account yielded about .01% which meant I was making about $.01 per year for holding my money with them. With the right bank account, say one that yields .4-.5% could make you drastically more money.
For example: If you had $10,000 in savings for 1 year with Bogey Bank (.01% interest) you would have $10,001 after 1 year. If you had $10,000 in savings for 1 year at Emotionally There Bank (.4% interest), you would have $10,040. I also want to note, it would actually be more than $10,040 because of compound interest which I’ll talk about below.
Don’t Blame Yourself - We’ve all dated duds and I think it’s a part of growing up. If I could take a guess, 80% of us have probably been in a sh*t relationship like I described. Funny enough, 75% of Americans don’t have high yield savings accounts. The national average APY is also 0.07%1. So if your money isn’t earning money, that’s okay. Just dump the dud today, and look ahead.
Things to be Mindful Of
Welcome to the Compound - In the example above, I mentioned you could make $40 in a .4% interest yielding account. While that would be true if banks paid yearly interest, they actually generally pay interest monthly. Therefore, when you get interest, your interest makes interest (it’s called “the snowball effect”).
For example: Say you deposit $10,000 in Emotionally There Bank (.4% APY) and they pay interest monthly. You would receive interest on your interest every month. In that case, you would end the year with $10,041, which is more than the quoted interest rate of .4%. If you don’t want to get all into the math, you can plug your cash into an interest calculator. The difference may seem minimal, but over many years or with bigger deposits, it can really start to add up.
They Fluctuate - Even if you lock in a stellar interest rate, the bank you use can change their rates. Relationships often work the same way, what can start off perfectly can change. That’s why you should check your interest rate every once in a while. I check mine yearly just to see what’s going on with my cash.
Minimum Requirements - While you should consider putting your money in a high yield savings account, you have to understand that some banks might want minimum balances. That means, you have to make sure you keep a certain amount in savings to get the high yield. On the flip side, they might even charge you if you drop below the minimum, so be sure to read the fine lines before moving your cash over.
What Should You Do Now?
Check Your Current Rate - Go to google and search “what is the APY of ‘blank’ bank?” If it’s low, consider moving to a high yield savings account.
Move Your Money Honey - Check out some high yielding savings accounts below:
Marcus by Goldman Sachs Online Savings Account: 0.50% APY
American Express® High Yield Savings Account: 0.40% APY
Ally Online Savings: 0.50% APY
Emergency Funds - Make sure you have 3-6 months living expenses in cash. That’s a general rule of thumb when it comes to how much you should have in cash. The rest, you should consider investing (article dropping next week).
What’s next?
Stay tuned for next week’s article - I’ll be talking investing and orgasms - two things were not getting enough of. If there is a topic you want to discuss, please DM me or email me at kelsey@tardiapp.com. I also host a weekly Clubhouse room on Tuesdays at 4:30pm PST/7:30pm EST called Not Your Boyfriend’s Investment Advice, so you can ask me anything live. See you next week lover.
Disclaimer: All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
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