Summer Savings For School Employees

A summer savings account is a specialized savings product built for educators and school staff, especially those who are on 10-month pay cycles. Instead of scrambling to stretch your last paycheck through July and August, you contribute a set amount from each paycheck during the school year. Those funds are held in the account and then disbursed to you — along with any dividends earned — when summer arrives. This program is available for all school employees regardless of how many times they get paid throughout the year though – a 12-month employee can still take advantage of this program as well.

At California Credit Union, our Educator Summer Savings account lets you deposit up to $2,000 per month via payroll deduction or automatic transfer. Your balance, plus dividends, is deposited into your credit union account each July.

A summer savings account takes the guesswork out of budgeting for the months when you’re not receiving a paycheck. Here are a few reasons educators rely on them:

• Consistent summer income: You’ll have money deposited directly into your account in July, so you’re not dipping into emergency funds or relying on credit cards to cover expenses
• Competitive rates: Our Educator Summer Savings account offers a competitive APY, at rates typically well above what most traditional savings accounts offer, so your money grows faster while it sits
• Automatic contributions: Payroll deductions or automatic transfers mean you don’t have to think about manually moving money each pay period
• No fees: There are no maintenance fees eating into your balance

If you’re weighing the differences between a bank vs. credit union, these accounts are a good example of how credit unions often offer products tailored to specific member needs.

A traditional savings account is open to anyone and lets you deposit or withdraw funds whenever you want. A summer savings account, on the other hand, is purpose-built for school employees. Contributions happen on a set schedule during the school year, and the full balance is disbursed at a specific time, which is usually in July.

A summer savings account also tends to offer higher dividend rates, so you’ll benefit more from earned interest over the course of the school year.

If you’re not sure which account is right for you, it helps to understand the key differences between a checking vs. savings account before deciding where to put your money.

Even with a summer savings account in place, a few smart habits can help you get the most out of your money. These strategies make it easier to stay on track:

• Set your contribution amount early: Decide how much you can set aside from each paycheck at the start of the school year and automate it
• Build a separate emergency fund: Your summer savings account should cover planned summer expenses, not unexpected ones. Keep a small emergency cushion in a separate account
• Use your summer budget wisely: Once your funds are disbursed in July, create a simple monthly budget so the money lasts through the start of the next school year

Opening a summer savings account at California Credit Union is straightforward. You’ll just need to be employed at a qualified California public or private school. From there, you set up monthly payroll deductions or an automatic internal transfer, choose your monthly contribution amount (up to $2,000) and you’re set. If you’re new to California Credit Union, you can open a bank account online to get started.

The dividends you earn on your summer savings account are considered taxable income, just like dividends earned on any other savings account. You’ll receive a 1099-INT form at the end of the year if your dividends exceed $10, and you’ll need to report that amount when you file your taxes.

A summer savings account can also be part of a larger financial plan. The money you set aside for summer expenses frees up other funds for long-term goals, which can be helpful when you’re figuring out how to save for retirement or pay down debt. When your short-term finances are stable, you have more room to plan ahead.

California Credit Union does not offer tax advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.