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Savings Fundamentals

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Call us at 888-213-4695 or visit your local branch.

Saving is a lifelong journey, but that doesn't mean it has to be daunting. Even small amounts can add up over time. Consider these four essential savings tips, listed in order of suggested priority, as well as other goals to focus on along the way.

Contribute to your company’s retirement plan and other tax-advantaged accounts up to the maximum match.

What you can do now:

Credit can be a powerful tool if it's used wisely. But if it gets out of hand, maintaining high balances on your credit cards could cost you hundreds of dollars in interest each year.

Example: The staggering cost of credit card debt.

If you buy a $3,000 TV on a credit card with an annual interest rate of 14%, make a $100 payment each month, and don't use the card for additional purchases, it will take over three years to pay off your balance. And you will end up paying more than $700 in interest—almost a quarter of the original purchase amount.

Original Debt Interest Rate Monthly Payment Months to Pay Off Debt Interest Paid
$3,000 14% $100 38 $716.72
Source: Schwab Center for Financial Research. Assumes an interest rate of 14%. The amounts shown do not reflect any fees or penalties. This example represents a hypothetical debt scenario and is for illustrative purposes only.

What you can do now:

  • Use our Debt Calculator to see what your debt is really costing you.
  • Try to negotiate a lower interest rate with your credit card companies.
  • Avoid making only the minimum payment on your balance. Pay as much as you can afford each month to avoid high interest rate charges. If you have more than one credit card, pay off the card with the highest interest rate first.

Build an emergency fund to cover at least three months' worth of living expenses to help avoid borrowing from credit cards or tapping into retirement funds. Having emergency cash on hand also helps you avoid selling long-term investments at inopportune times in the market.

What you can do now:

  • Make a list of your essential expenses to see how much you need to save. There's no need to include nonessential items like cable TV or entertainment, since this emergency fund is meant to cover the bare necessities.
  • Decide where to keep your funds. It's preferable to keep them somewhere relatively liquid, such as in a money market mutual fund or deposit account, a short-term CD,1 or an interest-bearing checking account. See more options to invest your cash.

Maximize your savings by contributing to your employer-sponsored retirement plan to get the full match amount and up to the annual contribution limit, if possible. If you can afford to save more, consider opening and funding a Schwab IRA, or if you're eligible, contributing to a tax-advantaged Health Savings Account.

What you can do now:

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