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Got Extra Cash? Think About These Saving Options

From time to time, we end up with a little more cash than we are used to. Sometimes it is unfortunate circumstances like an inheritance; other times, it is a bonus or a win. Extra money can often make us want to spend cash asap. 

Afterward, a little bit of regret can creep in for everything that money could’ve been. 

Of course, when you first get your extra cash, you should treat yourself – or what’s the point? 

We never know when an extra lump sum of cash will be useful, so it’s really worth considering if you need access to the money quickly or it would be OK to leave it in an account for a while. 

You’ll need to choose which ones of these will relate the most to your circumstances and which is best for you and your family. 

 

Upgrade

Before putting the money away, we mentioned sometimes spending a little bit of it first. This is the perfect time to take a look around and see what you could update. 

As an example – your mattress, any white goods like the refrigerator, electricals that are old or don’t have the highest energy rating. 

When you make upgrades, you ultimately save your future self the replacement costs, and opting for the highest energy ratings saves money long-term on bills. 

As soon as you upgrade, make sure you update your home warranty so that your goods are covered. 

Speaking of saving money on your energy bills, read this: Save Money on Energy Bills With These 6 Economical Tips.

High-yield savings account

If you want to grow your savings but still have access to the money, then a high-yield saving account is one of the best options. 

You should opt for a high-yield saving account because it pays a higher percentage of APY than a regular account. 

Before you put your money into the account, take a look at the withdrawal options, they are typically limited to a set amount per year. 

Many high-yield accounts offer a sizable bonus in return for opening the account. Still, it should be noted that the bonus usually requires that you have a minimum amount of $5000 to $10000 in the account, and what you need to deposit also might have a designated amount. 

Checking Account

A checking account is one of the safest places that you can put your money. It is an insurance credit union or bank. 

Checking accounts aren’t typically used for saving accounts, instead, people use them for their disposable income – money that they can use to cover everyday expenses. 

The bonus to checking accounts is that you can deposit and withdraw at any time, and you know your money is safe. 

If you want to set aside some of your extra cash here, to cover daily expenses rather than use your regular income, that can work well. 

There are also several checking accounts that offer a decent yield, but you may need to shop around a bit to find the best deal. 

Short-term bonds

If you are pretty financially stable outside of this extra cash, this might be a great option. Short-term bonds usually require you to leave the money in the account for around five years, though. 

And another point that it is important to remember is that you can also lose all of your money with stocks and bonds. 

Your principal isn’t protected, which means that when you can finally access your money, you might have less than you had put in there. 

In general, the longer the bond duration, the more likely it is you will get less. Many investors prefer this short-term bond option. 

Certificate of Deposit

A regular savings account and a certificate of deposit differ because the CD means your money is inaccessible for a set term. If you need to withdraw the cash early, you will need to pay the penalty to do so. 

One thing to watch out for is opening a CD when the rates are low. But if you open them when the rates are high, the nature of the CD means you will enjoy that rate – even if the interest falls – because you are locked in. 

You can put extra cash in other places, but you need to be mindful of the pitfalls and perks before jumping at the chance. Stocks come with some risks attached, but they can offer great returns. If you happen to have a large amount, then buying a house to rent out is a long-term investment that will continue to give a return – and often the best option.

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