While building your savings is important, where and how you build them may be even more important. Here are some questions to ask yourself to make sure you are using the savings account that works best for you and your financial goals.
WHAT IS THIS MONEY FOR?
First, you identify for what the money you are saving will be used. For example, a down payment, a vacation, emergency savings, a house remodel, etc. Once this is determined, you will be able to pick the savings account that will work best for you.
WILL YOU NEED ACCESS TO THE MONEY?
While you are saving, is there a chance you will need access to the funds. For some accounts, withdrawing money before the term is up, such as a CD, may result in an additional fee. If this account is going to be your main source of saving, it may be helpful to keep it somewhere more liquid, such as a Money Market account.
WHAT IS YOUR SAVINGS TIMELINE?
When it comes to your savings, time can be one the biggest benefits. For some accounts, the longer your funds are stashed away, the more interest you will earn. For example, if you are saving up to remodel a bathroom, but have access to another account for emergencies, placing this money in a CD with a higher interest rate may help your savings over time.
ARE THERE ANY FEES?
Depending on the financial institution you select, there may be fees associated with your account. If you are trying to save up money, paying fees may be counterproductive. Complete your due diligence when opening an account to ensure you don’t encounter surprises in the future.