What to Consider When Starting a Savings

Do you want to save money? The answer most likely is yes! Like most things in life, the best advice is to keep it simple. “Saving money, even if only a small amount at first, can make a big difference over time,” says Mike Crews, Universal Banker III. “Don’t forget- small victories are a big deal! At Town and Country Bank and Peoples Prosperity Bank, we pride ourselves in working with our customers and community members to pinpoint advantageous ways to save money unique to their lives.”

While saving money is always a good idea, you may be concerned about losing your public benefits. Keep reading to learn about savings options that enable you to save money without losing your benefits!

Choosing Where to Save Money

Saving even a small portion of money per paycheck adds up in the long run, but where should you keep it? Consider the advantages and disadvantages of savings options before choosing where to build your savings. Common places people consider building their savings include:

Home

• Advantages: No fees, rules, or additional costs. It's convenient and easy-to-access.
• Disadvantages. The money isn't secured, so the funds can be lost, stolen, or damaged. Easy-to-access means easy-to-spend.

With friend or family

• Advantages: There are no fees, rules, or additional costs. It may be convenient and keep you from spending too much.
• Disadvantages: The money isn't secured, so the funds can be lost, stolen, or damaged. Additionally, it may strain the relationship if something happened to the money while in their possession. 

Prepaid Card

• Advantages: They're easy to get and convenient to carry and use. The electronic functionality means direct deposits and transfers are possible.
• Disadvantages: There may be fees and expiration dates. Additionally, the funds may not be secured if the card is stolen or lost, and may not be insured.

Savings Account

• Advantages: Deposits are federally insured up to $250,000, so you can rest easy knowing your money is secured. These accounts sometimes earn interest, so there's an opportunity for greater rewards.
• Disadvantages: There may be recurring fees, and the number of withdraws are limited per month.

Some key things to consider are:

• Is my money safe and secure?
• Is it protected, should anything happen?
• Do I trust the people overseeing it?
• Am I earning any additional returns?
• Can I manage the money online?

If you have a high dollar amount in savings, you may want to consider an account with higher interest rates and returns, including:

• Money markets
• Certificates of Deposits (CDs)
• Retirement Accounts

Savings and Public Benefits

Once you exceed certain income or asset limits, some public benefits, including SNAP and Medicaid, may be reduced or removed. If this is a concern for you, don’t worry! There are some special accounts that enable people to save money without losing eligibility for their benefits.

Able Accounts: These are tax-advantaged savings accounts for individuals with disabilities that enable you to save money without losing eligibility for most public benefits. Only one ABLE account is allowed per person, and anyone can make contributions to it. There is a limit on how much can be contributed to the account each year. If the account exceeds $100,000, eligibility for Supplemental Security Income (SSI) is retained, but the SSI cash benefit is suspended. The money in an ABLE account can be used for qualified disability expenses, including:

• Education, housing, and transportation
• Employment training and support
• Assistive technology and personal support services
• Health care expenses
• Financial management and administrative services
• Other expenses that that help improve health, independence, and quality of life.

If the money is used for non-qualified reasons, the money withdrawn from the account is subject to taxes.

Special Needs Trust: A trust account designed to fund long-term expenses for people with disabilities. These can be complicated and usually require an attorney to establish. Information on these accounts can be found by searching “Special Needs Trust” at www.ssa.gov.

Pooled Special Needs Trust: This account provides the benefits of a Special Needs Trust, but costs less. A single person or entity manages the sub-accounts for many beneficiaries. In many cases, a nonprofit organization manages the account. More information on this type of account can be found on the Special Needs Alliance website.

Plan to Achieve Self-Support Account (PASS): This account allows individuals with disabilities to save money for items of services required to achieve educational or career-specific goals. People who seek this type of account are usually seeking employment that reduces or eliminates the need for disability benefits. For more information on this account, search for “PASS” at www.ssa.gov.

Matched Savings Account: These accounts are typically run by local community-based organizations and are meant for people who are saving for a specific purpose. The savings are matched by the organization in charge, and sometimes require you to attend financial literacy course. These accounts may not count against public benefits if they are federally funded, or part of a PASS. Eligible purposes include:

• Job training
• College education
• Small business start-ups
• Purchasing a home

Keep Up With Our Financial Literacy Seminars

To keep up with topics covered in our financial literacy seminars with the SHA, check out our blog! Not sure where to start building your financial future? Visit us at one of our 12 conveniently located branches to speak with a banker about building a financial plan that’s right for you.