Make Sure Your Money Is Working Hard For You

by Pam on July 5, 2010

It is important to make sure that your money is working hard and not just sitting idle in a low interest deposit account.  With the exception of keeping a few months worth of living expenses tucked away in a savings account as an emergency fund, I would advise that you make the rest of your money work much harder.

For example, right now we have an open variable rate mortgage at an interest rate of 2.5%.  Rather than keeping all of our money in a savings account that pays less than 1%, we decided to put $5000 extra towards our mortgage principal to decrease the amount of interest we pay.   Although 2.5% is a fairly low interest rate, our mortgage is our only debt right now; otherwise we would have paid off higher interest debt.

If you currently have idle funds sitting in savings, and you have more than enough set aside in case of emergencies, you might want to consider paying down your debt, starting with the highest interest rate debt first such as credit card debt.  You may also want to consider tucking some of it away in an investment for retirement or for other savings goals you might have such as a trip or vehicle purchase.

The main thing is that you put your money to work.  Don’t let it just sit in an account doing nothing.  Instead, make a plan and stick to it.  Create attainable goals and make sure your money is in the proper vehicle in order to achieve those goals.  The choices you make today regarding your finances will significantly impact your future financial wellbeing so it’s important that you make wise choices.

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