Gain More Control With These Savings Accounts -

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Have you ever heard that saying “Don’t work harder, work smarter”? Have you ever considered using that same motivation towards your personal finance goals? Gain more control over your money by allowing it to work smarter for you. To help your money work smarter and not harder is by allowing your money to passively earn interest. There are many different savings account options that can help you increase your money through interest. These types of accounts work great for short-term and long-term money goals.

Traditional Savings Account

There are deposit accounts help at various banks and financial institutions referred to as traditional savings accounts. Based on the amount of money held in traditional savings account you can earn interest on that balance. The interest rates on the accounts can be either a fixed interest rate or a tiered interest rate. When you encounter a tiered interest-bearing account you have the potential to earn more money based on your account balance.

While you can grow your money in small amounts over time, these accounts may come with certain restrictions. Many restrictions found with savings accounts is the limitation on the withdrawal of funds. Some traditional savings accounts may require you to maintain a minimum balance. When a minimum balance is not maintained then you may be subjected to a small fee. We like to use traditional savings accounts for our emergency fund as it is easily accessible when needed for a true emergency.

Money Market Account

A money market account is another type of savings account that your bank or financial institution may offer. These accounts also give you the ability to earn interest on your account balances. Money market accounts typically have higher paying interest rates and fewer restrictions on how you can use your money. Typically a money market account will require a larger first-time deposit into the account. These accounts may also require you to hold a larger average monthly balance.

Many times you will find that money market accounts are referred to as a hybrid between a checking and savings. Money market accounts are also a great alternative to an emergency fund. We would eventually like to use a money market account as our money market account. However, we will have to move into baby step 3 of Dave Ramsey’s Total Money Makeover before we can meet the requirements.

Certificate of Deposits

A Certificate of Deposits is a type of savings account in which you choose the length of maturity time for your savings. Many Certificate of Deposit accounts can range from maturity dates of 6 months up to 36 months. Depending on the length of Certificate of Deposit that you choose, interest rates can be higher than your traditional savings account or money market accounts. During the duration of your certificate of deposit account, you can expect to be locked into the same interest rate until your maturity date. This is a great benefit if interest rates happen to drop at any time during the length of your account.

These are great accounts to have when you want to diversify your savings. Keep in mind that once this type of account is open, you will not be able to access the money until it reaches its maturity date. If it becomes absolutely necessary that you need the money within the account, then you can take a penalty to retrieve it. However, you typically have to close out the account altogether and you have a higher risk of losing money.

Overall, a Certificate of Deposit can be a great form of savings for your children or grandchildren. These are also great accounts to have short-term savings until more long-term savings plans are made. Especially if you receive unexpected amounts of money from a small lottery winning or inheritance.

Specialized Savings

There are a variety of different savings accounts based on your savings needs. Many of these accounts have different requirements as mentioned previously. Minimum account balances, limited access to funds, and the maximums that can be contributed are just a few of the common requirements. We have experienced the value of having a fully-funded emergency fund since we have been introduced to Dave Ramsey. A fully-funded emergency fund means having 3 to 6 months’ worth of expenses saved up for those unexpected lemons life throws at us.

Everyone has different life circumstances and sometimes you may find that is necessary to contribute to multiple savings account alongside your Emergency fund. Depending on the needs of your family, you may find it helpful to contribute to a Health Savings Account, a Holiday Savings account, a Retirement account outside of your employer, and so on. These accounts all come with there benefits and may be different based on your individual needs. I highly recommend researching your bank or other financial institutions on their specialized savings offers and how they can help you take more control of your money.

Health Savings

A great savings option for those who have high insurance deductibles or high medical expenses each year. Contributions into health savings accounts may be through automation or through a one-time deposit. In order to utilize the funds within a health savings accounts may require proof of medical expenses needed.

Retirement Savings

One can never have enough saved for retirement. Individualized retirement accounts are great for self-employed individuals or those who work for employers that do not offer a retirement plan. Individuals who do have an employer-sponsored retirement plan and contribute can also build their retirement through individualized accounts. It never hurts to diversify your retirement savings and could potentially help out when it comes time for tax season.

College Savings

A 529 plan is a type of savings account that allows obtaining educational expenses easier. This specific savings plan can also offer some tax advantages. Anyone who is needing to save money for educational expenses may find these accounts beneficial. Many may believe that 529 plans are only for the purpose of college educational expenses. A 529 plan can also meet the needs of those educational expenses related to K-12 as well. It is highly recommended to do your own research into whether this type of savings may meet your needs.

Holiday Savings

Many banks and financial institutions may have different names for holiday savings. However, the name, many of these accounts earn the same interest rate as a traditional savings account. These accounts are great for saving up for the Christmas Holiday. They allow you to save up the funding need and then will send you a check or deposit the money into a checking account at a specific date just in time to shop for the Holidays. You can automate these savings and if you try to use the funding in the account you would typically have to close out the entire account.

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What type of savings accounts do you use to gain more control of your money?

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