Savings

Saving money on purchases can help you work toward your goal of making your finances work for you. Once you have extra money coming in, not including the money you should be putting toward debt, you can decide the best place to keep your money safe, yet profitable.

A savings account is a very safe and liquid asset. Most commercial banks will only give you half a percent in interest. This type of asset is probably not the best way to manage your finances. On average, the cost of inflation is around 2% each year. If your money is not making you 2% or more, it may be best to find alternative accounts. Many of these banks offer a money market account that earns more interest. Some banks may require a minimum balance in your money market account and may put restrictions on how many times you can make a withdrawal. Money market accounts are fully insured by the FDIC.

High yield savings accounts are a better way to make your finances work for you because they can give you more interest than other savings accounts. Right now, you can make around 2 or 3% on a high yield savings account. Always shop around for the best deals. Banks, such as Ally, ING, and other online banks will give you a decent interest rate on your savings account. Your money is still very liquid in these accounts, and backed up by the FDIC.

Purchasing a CD (Certificate of Deposit) is another way to make your finances work for you. You can buy CDs in different amounts of time. For instance, you can purchase 3, 6, 12, 18, 24 months or more CDs. This time frame means that you will not be able to take out your money until the time frame has expired without a monetary penalty. The longer a CD is the more interest you can earn on it. This type of account is not very liquid, but it can earn you decent interest. And unlike the other savings accounts, the CD is a fixed interest rate. Money markets and savings accounts can lower your interest rate based on the national index.

It is very important to have your finances work for you. Any time you keep cash on hand, you are loosing around 2% or the cost of inflation. Your dollar last year is probably not worth a dollar today. Savings accounts can help combat this loss. With the crash of many banks this past couple of years, it seems like your money is not safe, but it is. The Federal Deposit Insurance Corporation (FDIC) will insure your money up to $100,000 per depositor. Due to the recent bank foreclosures, the government changed the rules and are now insuring people up to $250,000 through the end of 2013.