It’s important to have a reliable place to store your hard-earned money. But before opening a savings account, you should think about what your goals are. Are you wanting to set money aside for a rainy day? Or do you want to save up for something big, like a vacation, house or new car? Once you have a goal in sight and a clear direction of how you want to prioritize your money, you can set a savings strategy that works for you.
A savings account is the foundation of creating a strong financial plan. You should plan to use this account as a place to deposit money to save and not regularly withdraw for expenses. You can use this account as a place to house an emergency fund and to save up money for other planned purchases. A savings account is the foundation of creating a strong financial plan.
Once you have built up reserves in your savings account, or if you are using your account for short-term savings goals, you should consider looking to grow your savings with money market mutual funds and time deposits. Both of these offer low-risk ways to earn interest on your money, which can help you save more money in a shorter amount of time. Time deposit accounts usually pay a higher rate of interest but your money is locked in for longer and you’re therefore less liquid. On the other hand, money market accounts allow you to more quickly access to your funds, but generally offer lower interest rates.
Download the full Savings Solutions Explained infographic to learn about the differences between a savings account, money market account and time deposit account to find out what works best for you.
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