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Unless you keep your money in your mattress, you probably have a checking account. If you want to set a little aside every month for a special (or unexpected) expense, a savings account is a great choice. Those two accounts can cover basic money management, but today banks offer many more options that help you plan for the future.

Money Market Account

Similar to a savings account, a money market account differs in that it requires you to keep a minimum balance. The upside is that, instead of a fixed interest rate, these accounts have an interest rate that varies with the money markets. So when the market goes up, so do your savings.

Most people who have these accounts don’t write checks against them, preferring to keep a higher balance that can create higher earnings. A few banks don’t allow you to write checks, or if they do it’s on a limited basis. Be sure to discuss the requirements and benefits with your bank.

Certificate of Deposit (CD)

If you receive a chunk of money from a work bonus, the sale of a car or house, or from that rich relative we all wish we had, you might consider investing it in a CD. With a CD, you agree to invest the money for a specific amount of time, from a few months to several years. In exchange for that agreement, the bank gives you a higher interest rate than they might for just a savings account.

In general, the more money you put into the CD, the higher the interest rate. The bank keeps track of your earnings, and any dividends along the way can be sent to you or left in the CD to accumulate over time. Even though the money will be unavailable for withdrawal (without a penalty), you can be assured that those funds will be available for any expenses down the road.

Individual Retirement Account (IRA)

Many employers provide an opportunity to invest in an IRA as part of workplace benefits. If yours does not—or if you’d like to save more than your employer-based plan allows—talk to your bank about opening an IRA. There are two different types to consider.

    1. Traditional IRA
      Contributions are tax-deductible and can grow tax deferred (taxes are paid upon withdrawal); anyone is eligible to enroll; and you can leave the assets to your designated beneficiary.
    2. Roth IRA
      Your contributions are taxed upfront, but can be withdrawn without penalty at any time; you can enjoy tax-free income during retirement; and your beneficiaries could receive tax-free income as well.

There are other benefits and risks to both, so be sure to consult your banker or tax advisor before deciding which way to go.

There are two other types of accounts that you may want to investigate, if your bank has them. One is an Education Account, and the other is a Health Savings Account. In Texas, Frost Bank offers both, and helps its customers decide when, if and why these options might help manage future finances.