How To Grow Your Emergency Savings AccountGet the highest savings interest ratesThere are two ways to grow an emergency savings account. One is to obtain a higher interest rate on the money you save. There is quite a wide spread in interest rates paid by various banks, so it will pay you to compare savings accounts. When I did this, I found that the highest savings interest rates were offered by the online banks. They pay at least 3% more per year than any of the brick and mortar banks I deal with. Of the accounts you can open at your local bank, a money market account will offer the highest interest and the greatest liquidity. Certificates of deposit yield better than money market rates but are much less liquid.
High Yield Online Savings AccountA high yield online savings account works slightly differently than an account at a local bank.An online account must be linked to a checking account at a brick and mortar bank. This is what allows you to make deposits and withdrawals online. You transfer money into and out of the internet savings account via the checking account. These transfers take approximately three days. This more than meets my liquidity requirements for an emergency cash stash. This also gives me time to think about whether I really need to withdraw the money in the first place. A good thing for a spendthrift like me. High yield online savings accounts also satisfy my safety requirements for emergency savings. But they are not the only option that does. You could stash the cash in U S savings bonds. Certificates of deposit are good too. These instruments tie your money up for much longer than a high yield online savings account; so you might want to use these only after establishing a good cash cushion in a more liquid account. Use any savings instrument you like as long as it's safe (government insured) and easy to access or convert back to ready cash. Be sure not to exceed the FDIC insurance limits at any one institution.
Save More Money!This is the other way to grow your emergency cash stash. There are two ways to do this too:How Can I Make More Money?Take on a part time job the easy way.
Retirement jobs are good ways to make money to beef up meager emergency funds.
You can never have too much money in the bank because you never know what kind of curve ball life (or the economy) is going to throw at you. Your goal is to establish an ever-growing cash savings account.
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