How to Feel Like You’re Making Smart Money Moves
Want to feel like you’re making smart money moves? Picking a savings tool that matches your
savings goal will definitely help. We tend to limit our thinking to the basic Savings Account.
And while there’s nothing wrong with a Savings Account(Opens in a new window), there are
options that may be better for you.
Here are four different savings tools to help you
reach your goals.
I Just Want to Have an Emergency Fund
If your main goal is building up an emergency account, you should consider a savings product that does two things:
Protects your money, and
Keeps it accessible.
The whole point of an emergency fund is to separate it from the money you will be
spending. At the same time, you need to be able to access the money quickly and
easily if you do have an emergency. In this case, a basic Savings Account(Opens in a new window) may
be your best solution.
With a Savings Account, you can make regular deposits
and establish automatic transfers to build your balance. You won’t be tempted to
spend the money since it’s not in your Checking Account. Yet you can withdraw funds
if you do find yourself in a financial bind.
You can finally have a Savings Account that makes you proud. Listen in to the “Easiest Ways to Start Saving Money” podcast episode. In just 14 minutes, you’ll get easy-to-do steps on how to find money to put into Savings. I Want to Listen(Opens in a new window)
I Have a Short-Term Savings Goal
Not all goals are years in the future. Maybe you need to pony up for a bridesmaid’s
dress or tux. Maybe you want to take a much-needed getaway. The smart financial
decision is saving up for these expenses, rather than swiping your card. Who wants
to pay for a bridesmaid’s dress for the next year?
When you have short-term
goals, you want to keep the cash accessible but removed from your spending money and
your emergency savings. Your best bet is to open a Special Savings
Account.
Just like your basic Savings Account, this Special Savings Account
allows for regular deposits and automatic transfers to build the balance. And there
are no penalties for withdrawing money, unless your financial institution requires a
minimum balance.
Set and smash your savings goals. Financial Tools already lives in Digital Banking and the MHV Mobile App. You just need to pop in and set up your goals. Get started with your goals today.
I Have a Long-Term Savings Goal
Long-term savings goals include expenses like a down payment for a car or house,
college savings, even retirement planning. When planning for the long game, you
should take advantage of that timeframe to earn some money on your
savings.
Savings products earn interest. Even your basic Savings Account
does. With basic accounts, though, the amount you earn tends to be quite low (think
less than 1%). So if you know you have a chunk of time to save, a product that has a
higher yield tied to a term length can benefit you.
Consider Certificates of
Deposit. Certificates earn higher interest because you’re not allowed to access the
funds for a certain period of time, also known as the term. Because your financial
institution keeps the funds on deposit for a longer period of time, you’re rewarded
with a higher yield. There are various term lengths, including terms as short as a
month up to 5 years or more.
Unlike Savings Accounts, you cannot usually make
regular deposits into a Certificate nor can you withdraw the money early without
incurring a penalty. For this reason, it’s important to pick a term that aligns with
when you think you’ll need the money. For example, if you plan on buying a house in
3 years, you wouldn’t commit to a Certificate with a 5-year term.
Because you
can’t access the money you’ve put into a Certificate of Deposit prior to the term
date, they aren’t ideal for an emergency Savings Account.
You’re ready to start savings, but not sure where to start.
Get your free guide on How to Master Your Money for all the tips and techniques you need to get going.
I Want My Savings to Earn Money
You may be somewhere between a basic Savings Account and a Certificate of Deposit.
Isn’t there a way to make money on your savings but still be able to access your
money?
Yes! Money Markets are a great alternative. Interest earned on your
Money Market balance is usually higher than a basic Savings Account, yet you can
access the funds as you need them.
Money Markets also allow regular deposits
so you can continuously build your balance. You can often write a certain number of
checks against your Money Market, too, which can be handy if you have emergency
repairs pop up.
Money Markets often have balance requirements, though, so if
your account drops below that required amount you will incur a fee. If you’re
considering a Money Market, you may want to maintain a basic Savings Account as
well.
Picking a savings
tool that matches your goal will help you feel financially confident. You’ll know
you’re making smart money moves. It’s a big decision, though, and you can also
talk to us(Opens in a new
window) about which may be the best option for
you.
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