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.