This is a guest post on behalf of MoneySupermarket.
There are several different ways that individuals and family can set aside a little money. There are all types of means for keeping that money, including savings accounts, IRAs, and even fixed rate bonds.
If you are looking for a way to save your money, consider each of the options and decide which will work best for you. You can also divide the money up and keep funds in a variety of different places to avoid having all of your eggs in one basket.
A savings account is usually risk free and doesn’t require a lot of upfront cash. You can open an account locally and even set it up at your current bank, making it easy to transfer funds between your checking and savings accounts.
The interest rate isn’t going to be the highest option available, but you aren’t risking any of the funds by opening an account. Set a short and long term goal for your savings account. When you reach one of the goals, you can start to place the excess money into something else.
You can help educate the children in your family by using a savings account. Many banks offer accounts for children. Here they can set up deposits and learn all of the basics about what they can do with their extra cash.
Opening an IRA is great for money that you don’t need access to for an extended amount of time. In fact, these funds aren’t going to be available to you until retirement.
Money in an IRA is part of a long term savings plan. You need a certain amount to start an account and you continually add money to watch the account grow.
In order to save enough for retirement, you can set up regular deposits or transfers into the account.
You can also see whether or not your employer offers a 401K or 403b for you to send money to each and every paycheck. This takes all the guess work out of saving for retirement.
Making deposits can bring down your taxable income, which is a short term benefit of this way to save.
Not having constant access to the funds is the downside.
A safe place to store some extra cash are fixed rate bonds. Even while the economy goes through ups and downs, the interest rate will remain consistent. You can tuck money away and wait for different levels of maturity to receive payment.
This investment is popular because there isn’t a lot of risk involved. However, problems can arise when inflation comes and devalues the bond. It is important to spend time researching before making a decision on this option.
Sometimes, just keeping some cash on hand is the easiest way to save. You might have a special hiding place for it or you may just be tucking it in the mattress.
Either way, this money is not earning any interest for you. It is convenient to access, but it isn’t growing. You also run the risk of losing it to theft or disaster.
Most of the time, you just want to keep a little bit of cash at home. Keep it in a secure location such as a safe. When you reach a certain amount, move it over to one of your other investment or savings accounts.