When it comes down to it one of the biggest reasons people fail financially is because they are not good savers. Saving money needs to be apart of your financial plan or you will be destine to live paycheck to paycheck or worse.
I found this out the hard way myself, when for several years I spent nearly everything I earned until one fateful day I had a talk with a close family member that changed my entire world. He explained to me that it’s not just about saving money but were you save the money that makes all the difference.
So in this article I’m going to cover 3 place to save money for your emergency expenses and show you which one is the best.
Certificate of Deposits
The first place to look into is bank CD’s. The great thing about these investments is that they offer a stable fixed return for you to grow your money. Not only that they have one trait that all emergency funds should have, they are unable to pull the money out.
With a CD it allows you to keep money out of reach and out of mind because they have due dates. In most cases a typical CD can run as short as a few months, up to five years, and the longer you keep the CD in the better your rate will be.
However on the downside if you want to get a banks best rate you’ll need to keep it locked for the longest term period and you will typically be require to invest as much as $10,000 to open an account. In the end this isn’t a bad option but their are better.
Money Market Accounts
The next option to consider is a money market account. These are accounts that invest in low risk securities such as treasury bills, and federal, and state bonds. On top of that these accounts can even be set up to have a check writing feature as well.
The downside is that these accounts are a lot easier to access, the interest rates are not fixed, and most of all the returns are not that impressive. In fact, in most cases you’ll be lucky to find an account that does over 1%. In the end I only recommend this option as a last resort.
Online Savings Accounts
Finally, the last option to consider is an online savings account. Now I’m not talking about just any saving account but an online account like the one offered through ING Direct.
The great thing about this account is that it gives a great rate averaging around 0.80% to 1.00%. On top of that their is no fees, and no minimum amount you need to invest to get this great rate.
On the other hand in order transfer money it will usually take around 3 business days. However when you consider it’s use as an emergency fund it makes a perfect fit since it takes that little bit of effort to withdrawal money from the account.
When it comes down to this account is the best way to save money for your emergency expenses. To learn more read my article on the ING Direct High Interest Savings Account Review, and I will walk you through the finer points of how this article works and how to set one up.
Final Thoughts…
As a final thought it’s never to late to start saving even as a kid and another great benefit about ING is that they also have a Kids Savings Account to help your child start learning early in life that saving money is very important. To learn more check out this article on how get your child started saving for their future as well.