Money Management: Savings

Your savings account is like your best friend – if you treat it well in the good times, it will be there to take care of you should an emergency arise. Your emergency fund should give you at least a six-month cushion. By that, we mean it should equal six months of your net pay. So, if your paycheck is $1,000, and you receive two paychecks a month, your emergency fund should be $12,000. Here are some options for storing and building your savings:

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Savings Account

A savings account is usually the first banking product people use and is a great way to meet short-term goals. Saving accounts earn a small amount of interest and are considered to be low risk. It is also easy for you to access your money when needed. With your $5 minimum deposit to a Share Savings Account, you become a member-owner of DCCU, entitled to take advantage of all the benefits, products and services available to our members. Maintaining a $5 balance in your Share Savings Account represents your share in the Credit Union. 

Certificate of Deposit

Certificates of Deposit allow you to invest your money at a set interest rate for a pre-set period of time. They often have higher interest rates than traditional savings accounts because when you buy one, you are actually loaning the financial institution money for a set period of time and getting interest in return – the longer the term (ranging from 6 months to 5 years) the higher the rate. But be sure you do not need to draw on those funds before you open a Certificate of Deposit, because early withdrawals may result in financial penalties. 

Money Markets

When you have money that you want to earn a higher return than a simple savings account but want access whenever you need it, a Money Market Account may be your best option. There is a set number of withdrawals you can make per month without penalty. Money Market accounts usually pay a higher rate than savings accounts but normally lower than CDs. These accounts are also insured by the federal government and require a higher balance than a savings account.

Individual Retirement Account (IRA)

Thinking about retirement? IRAs are useful if your employer doesn’t offer retirement benefits or you want to save more than your employer-sponsored plan allows. There is no better time than the present to start saving or to make additional contributions for your retirement. IRA Certificates provide:

  • Greater earnings through a higher dividend rate
  • Peace of mind knowing that your retirement funds will earn a constant rate
  • Security knowing that your funds are federally insured by the NCUA
  • Traditional, Roth, and Coverdell (Education) IRA accounts are available to assist with retirement planning. These are ideal choices if you’re rolling over a plan from an employer.
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