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Nearly 70 percent of Americans have less than $1,000 stashed away. If you think of what the rent costs in major cities, those average savings aren’t enough to cover it. In fact, one study by Freddie Mac showed that the average rent in large cities such as Los Angeles and San Francisco is significantly higher than $1,000. So what happens when people lose their jobs? Well, we’re looking at it right now during the pandemic. As soon as the country shut down back in March of 2020, we saw the pleas showing up online from individuals stating they’d lost their jobs and didn’t know how they’d even make April’s rent payments.
When you think of the financial situation many Americans are in, you can see what a big deal it is when even a “small” monetary gift comes along, maybe $500 in birthday money or $5,000 in commission. Making the most of it when some money does fall into your lap can help you not find yourself in a “How will I pay rent next month?” situation, ever again. We spoke to Jessy B DeFreitas, the President of Blanc DeFreitas and Associates Financial Services about responsible ways to handle a monetary gift.
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What to do with $500
If you’re looking to invest, you may feel sheepish about approaching a financial advisor with $500. But what you can do, says DeFreitas, is open a Certificate of Deposit (CD). This is a product offered by most banks that is a bit different from a savings account because it requires you to give them your money for a fixed amount of time (early withdrawals may be subject to penalties), but will yield higher returns than a savings account. The minimum amount of funds to open a CD is usually rather small, too. What’s also nice about a CD is that it’s insured by The Federal Deposit Insurance Corporation, so it’s quite safe.
