Smart places to put your savings

It's always tough to make ends meet, but a few painless moves can improve your long-range financial health.

Create an emergency fund.

Try to have at least three to six months of living expenses saved in a stable, interest-bearing account. Money-market funds, available at banks or financial services institutions, generally pay more interest than a standard savings account and still offer you the same access to your cash. Online banks, such as www.ingdirect.com or www.netbank.com, may offer good interest rates as well.

Save for retirement and pay off debt.

Both of these financial goals are important. Contribute the maximum possible to your 401(k), Roth IRA or any other retirement account you have. If your employer offers a 401(k) benefit, take advantage of it, especially if your company matches your contributions. Try to pay down your credit-card debt as well. Consolidate balances to one low-interest card.

Save, don't spend, your tax refund.

Getting a check from Uncle Sam can feel like "free money," but in reality that's money you've earned and lent to the government for 12 months. Try to avoid the short-term gratification of spending it, and instead save it or invest it―you'll get a long-term benefit.

Start investing in mutual funds.

Once you've taken care of the essentials, you can invest for the long-term. A mutual fund with a balance of stocks and bonds is an ideal place to start. Most require an initial investment of $500 to $3,000.