Oh, the places you can save your money! There’s no end to the number of creative ways to squirrel away savings: tucked under a mattress, buried in the backyard, sewn into a sofa, or stashed inside an old stuffed animal.

No doubt, you’d probably need a map to ever find your money again, but there’s an even bigger problem with these methods: You’re not giving it a chance to grow.

Park your savings in an FDIC-insured bank and you’ll earn interest on it. Plus, it’s secure.

So, if you’re ready to get serious about your savings efforts, this guide is for you. Start at step one, or select the step that’s right for you.

  1. Find your starting point.
  2. Set your goals.
  3. Compare your options.
  4. Build your skillset.

1. Find your starting point.

When determining how much you can afford, you should first understand how much you have. How else will you know how much you have for your savings fund?

Fear not, there are lots of ways to figure out how to begin. Here are a few of them:

Wrapping your head around what you have is an important step toward managing your savings. Because once you figure out how much you can afford to save, you can get started with dividing it up based on your goals.

2. Set your goals.

You know that you need to have some money set aside for rainy days. But there are a lot of other goals you might have when it comes to your savings.

So, while you should definitely be earmarking some of your savings for emergencies, think about what else you want to do with your cash. For instance, you may want to save for these life events:

Some of these goals have shorter terms than the others. The time frame matters because it shapes how you save.

For example, say you want to save $5,000 during the next year to take a backpacking trip to South America. It makes sense to keep your savings somewhere easily accessible. An online savings account might fit the bill.

There are plenty of savings account options, so let’s get into them.

3. Compare your options.

Another step to ensuring your money is working its hardest is to look closely at your bank.

When picking a bank, you’ll want to shop around for the best deal. Of course, you want to know the interest rate (just don’t confuse APY with APR). But you should also keep an eye out for fees and minimum deposits for different types of accounts. Don’t take a chance putting your hard-earned money in a bank that isn’t FDIC-insured.

And don’t underestimate convenience! Maybe you want easy and immediate access to your money. With CDs, you often have to wait for it to mature before you can withdraw money penalty-free. But with a money market account or savings account, you can access your money with ease, whether by ATM card, check, or mobile banking app.

Savings account

  • Traditional savings account: A good choice if you want something basic with no frills. Banks and credit unions with branches typically offer lower interest rates because of the cost of maintaining brick-and-mortar locations.
  • Online savings account: Offered by online-only banks, these accounts tend to offer a more competitive APY (the total interest paid on a savings account over the course of a year). Some online savings accounts do not charge a monthly maintenance fees and often offer 24/7 customer service, but be sure to check when you’re shopping around. See our Online Savings Account rate.
  • Specialty savings accounts: This might be as simple as a traditional or online account that you’ve earmarked for a specific goal. But some banks also offer accounts geared toward home buyers and college savers, for example.

Money market account

Money market accounts are similar to savings accounts, but with a twist. You can get a great interest rate and depending on the account, you may also be able to write checks or use an ATM card for cash withdrawals and point-of-sale transactions. See our Money Market Account rate.

Certificate of deposit (CD)

Saving with a CD is a little different from a savings or money market account. When you put money in a CD, you agree to leave it deposited for a set period of time, which could be anywhere from one month to 10 years. Withdraw the money early and you will most likely have to pay a penalty. Once the CD matures, you can withdraw your savings, plus the interest earned, or roll it over into another CD. Compare our CD rates.

Some banks, like Ally Bank, offer CDs specifically for retirement savings, called IRA CDs. With these, you get the tax breaks of a traditional or Roth IRA with the security of a CD. Compare our IRA rates.

Keep in mind that while FDIC-insured bank accounts offer the interest and security you may want for your short-term goals, you may want to consider a different option for your long-term savings goals.

For long-term goals, you might choose to accept more risk. An investment account, like a managed portfolio, may help you capture higher returns and could also help you outpace inflation to achieve your long-term goals.

As you think about which type of account fits your needs, make sure you’re shopping around for the bank that fits your needs, too. Compare our savings options.

4. Build your skillset.

Saving money is a skill just like any other — you can work to make yourself a stronger saver by being on the lookout for new savings strategies that improve your system. We offer tips and tricks that can help with questions you have about any number of topics, including the following:

There are tons of tiny ways to save, so that your money is always doing the most.

Once you’ve done the legwork, you’ll be ready for the next steps. (No, it’s not burying all of your money in bags in the backyard.) The sooner you figure out your saving needs and match them to a type of savings account, the sooner you can start growing your dollars and cents.

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