What to Do With Your Savings?

What you should do with your savings depends on when you will need the money and what you are saving for.

Keep emergency money accessible. Save separately for short-term goals. Money you will not need for several years may be better suited to longer term options such as investing.

KOHO High Interest Savings

It is a prepaid Mastercard, so you spend your own money while still earning high interest.

With KOHO High Interest Savings, you can:

• Grow your savings up to 3.5% interest

• Earn a 2% cash back rate on groceries, eating, drinking, and transportation and 0.5% cash back on everything else

• Unlimited transactions and free e-transfers

• No minimum balance required, ever

Build an Emergency Fund

One of the first uses for your savings can be an emergency fund.

This money can help cover unexpected expenses such as:

• Car repairs

• Home repairs

• Medical or dental costs

• A temporary loss of income

• Unexpected travel

A common goal is to eventually save enough to cover around three to six months of essential expenses. You can build toward that amount gradually.

Save for Short-Term Goals

Once you have some emergency savings, think about expenses you expect over the next few years.

This could include:

• A vacation

• A wedding

• A new car

• Home renovations

• A large purchase

• Moving expenses

Keeping this money in savings can make sense because you may need access to it soon.

Pay Down High Interest Debt

If you have high interest debt, using some savings to reduce it may save you money.

Credit card interest can be much higher than the interest you earn from a savings account. Paying down expensive debt can therefore have a bigger financial impact.

Keep some emergency savings available so you do not need to borrow again when an unexpected expense comes up.

Consider Investing Long Term Savings

You may not need to keep every dollar in a savings account.

Money meant for goals that are many years away may have more time to grow through investments. Investing also comes with risk. The value of your money can rise or fall.

Keep short-term and emergency money separate from money you are comfortable leaving invested for several years.

Keep Your Savings Organized

It can help to give your savings specific purposes.

For example, you might separate your money into:

• Emergency savings

• Vacation savings

• Home savings

• Car savings

• Long-term savings

This makes it easier to see how close you are to each goal. It can also stop you from accidentally spending money that was meant for something else.

Should You Leave All Your Money in Savings?

Not necessarily.

A savings account is useful for money you want to protect and access easily. Once your emergency fund and short-term goals are covered, consider what the rest of your money is meant to accomplish.

The important thing is to give your savings a purpose. Keep accessible money for near-term needs. Use longer term options for money you will not need anytime soon.