“Once you have your emergency savings locked away, invest a little in the market,” my dad would tell me.
“Long-term, it’s a good way to grow your money.”
That advice seemed sound as the market grew steadily for most of the past two years. Then I watched the market fly off the rails at the end of 2018. Things got scary. Money was lost. The whole episode was a wake-up call.
Now that I have a baby daughter, I need to find more ways to save money – not only for myself but for her future.
“The whole episode was a wake-up call.”
While I’m still attracted to the potential growth of investments, the guaranteed returns of saving accounts appeal more urgently to me right now.
With a growing family to support, financial stability is more valuable than “potential” earnings that might end up costing us.
So I set out to strategize a few simple ways to save money and have a put together a 2-step plan. This savings advice might not fast track you to a West Hills estate, but it will make the process both painless and lucrative for your young family.
Here’s my simple solution to get the best of both worlds:
My 2-Step “Save-a-CD” Strategy
There’s good news: after years declining to nearly nothing, savings rates are on the rise. That helps improve my returns while keeping the financial stability I need. I then boost my returns more by investing in certificates of deposit.
Step 1) Ensure Stable Returns While Keeping Your Money Liquid
To guarantee stable returns, I’ve taken a chunk of money out of the market and put it right into my Go Savings Account.
If you haven’t heard of Go Savings, it is a must-have in your financial toolkit. It just plain returns more than almost anything else available on the market today. And it keeps my money liquid, available for me to use at any time.
Note: To make saving money easy, I make it automatic. I set up an auto-transfer from my checking account to my savings account. Whenever I get a paycheck, some of it automatically goes to my savings. That way it’s painless and it allows me to follow through on my savings goals. My family appreciates that.
Step 2) CD Laddering Technique
To get higher returns, I put some money into Certificates of Deposit (CD). These returns are also guaranteed but they’re higher than those from my savings account.
Any money I put in the CD will be “locked,” so I only deposit money I won’t need until the CD matures. To get around this, I use the “CD Laddering” technique of opening multiple CDs at different terms. This unlocks some of my cash as soon as the first CD matures. It also keeps higher returns on the way from the longer CDs.
After that first CD matures, I can choose what to do with it. If I need the cash I’ll use it. If I don’t, I’ll put it in another CD. The money isn’t as fluid as it is in a savings account, but it allows me to access the cash every so often while still providing higher guaranteed returns.
If you have a young family or dislike risk as much as I do, this might be a good savings solution for you. It won’t fast-track you to wealth, but it’s a great way to maximize your returns if you prioritize financial safety and reliability.
Looking for more helpful ways to save money:
- 3 Essential Questions To Ask Yourself About Your Savings
- The Alchemy of Saving for Young Employees
- 7 Ways to Automate Your Savings
About the Author: Jacob Schnee joined Unitus as Marketing Specialist in March 2015 and transitioned to Marketing Communications Specialist in March 2017.
His experience has spanned hospitality, business development, consulting, and marketing in various industries along the east coast, west coast and in between.
When he is not developing internal and external communications for Unitus, he is engaging in recreational fitness, studying personality types and exploring the outdoors with his wife, dog, and baby.