Three is better than one. That's particularly true when it comes to building your savings. Taking a “triple-layer” approach — or layering your savings across three different accounts based on your different financial goals— can help you achieve your aims more quickly, while keeping your hard-earned cash safe in the meantime.
Think about your own financial wants and needs, and then see how a layered approach might help bolster your savings strategy.
A typical savings account is a great foundation for your savings plan and a practical resource to pull from when everyday expenses come up. It's also a good place to stash funds for short-term goals, like that new TV or an upcoming vacation. Choose a savings account that pays you interest and allows you to access your money at any time.
For Just in Case
Water heaters fail, jobs are lost and root canals happen. Nobody looks forward to these types of emergencies, but having funds ready to cover the unexpected costs can help soften the blow.
The rule of thumb for emergency fund savings used to be three to six months of income. But now some experts recommend setting aside between nine months and one year of your annual salary.
A money market account can be a good place to build your rainy day fund. Money markets typically earn more interest than a savings account, yet you can still access them at any time. And if you have a higher balance —$10,000 or more — you’re likely to qualify for a higher interest rate.
For Down the Road
You'll get the biggest bang for your savings buck in a certificate of deposit (CD). Your money will stay secure and earn higher rates than with a regular savings or money market account. However, since CDs have fixed terms and penalties for early withdrawals, they are best for longer-term, planned purchases. CDs are a good place to grow your savings for a down payment on a house, an RV or that dream kitchen remodel.
Rabobank offers a complete range of savings and money market accounts and CDs, with the added benefits of automatic monthly transfers and free online banking.
As a Rabobank customer, it’s fast and easy to open a new account online. Or visit your local branch for a personal discussion of how to start putting your money to work — and meeting your financial goals.
- “Creating a Savings Plan,” Help Minnesota Save, http://www.helpmnsave.org/index.asp?SEC=62288214-FCA6-4C07-9D6D-F408ED444E9F&DE=75C77DB2-1848-4111-A207-578DCF421C0C&Type=B_BASIC, accessed July 2, 2014
- “How Big Should Your Emergency Fund Be?” Michele Lerner, Bankrate.com, http://www.bankrate.com/finance/savings/how-big-should-emergency-fund-be.aspx, accessed July 2, 2014
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.