So you’ve built up a savings, now what do you do with it? You can’t stuff stacks of money under your mattress anymore, you need to be smart and plan for the future. We’ve compiled a list of the smartest places to grow, safely house, and give your credit life.

Pay Off Your Debt

Whether you have medical debt, credit card debt or student loans the first thing you want to do is get out of the red and into the black. There are a few different strategies for paying off debt.

  • The snowball strategy is when you’re starting off tackling the smallest debts and building momentum to the largest debts.
  • The avalanche is when you start paying off the debt with the high interest rates in turn paying the least in the end.  
  • Debt consolidation involves you rolling multiple debts into one single debt. With a lower interest rate and a manageable payment over a shorter period of time.
  • Create a debt management plan should your debt be overwhelming. A non profit credit agency will work with you to cut your interest rate and put you on a repayment plan.

Your debt is the first thing you should address when deciding what to do with your stacks of money.

Invest in Your Retirement Plan

The responsibility of retirement savings has shifted to the individual with the decline of pensions. Experts say you should be paying at least 10% of your salary into your 401k. Ask your employer if they offer a match and if so what percentage. What this means is, if they offer a 4% match they will match you up to 4% essentially doubling your contribution to 8%.  You can still, and should still, contribute above what they are willing to match.

Experts say a 401k may not be enough for your future. You should look into a Roth IRA, Traditional IRA, and Health Savings Account as well in preparation for retirement. We all want to enjoy our golden years. So preparation and being smart now will be a great reward for your future. For a free retirement calculator click here.

buying house

Down Payment for a House

Save up your money for a down payment to buy a house. There are far more benefits to leaving as 20% down payment rather than a 5% or 10% down payment. While it may take you longer to save up the 20%, you would have more equity in the home. Smaller monthly payments, a lower interest rate and you wouldn’t have to pay private mortgage insurance. In the future you could borrow against the equity or this would be all profit when you sell the house.   

Rainy Day Fund

Save up your extra cash for a rainy day fund. This is an account you can dip into for the expected occurrences. Such as a car repair, home maintenance, or routine medical expenses.  

Everyone needs a rainy day fund and you should have anywhere from $1,000-$2,000 in a separate savings account. Make sure you find a bank that has no monthly fees attached to your savings accounts.

Emergency Fund

Once you have all of your stacks of money in the appropriate places it is time to start growing your emergency fund. You will need a separate savings account or a money market account which may offer you the ability to write checks. This account will hold 3-6 months worth of living expenses that includes mortgages payments, car payments, bills, groceries, etc. This account is used only in the event of any unforeseen hardships such as job loss, unexpected medical expenses or divorce. It is crucial that you do not dip into this fund when you want to buy something like a new entertainment center. You never know when you will need your emergency fund.  

It is important that you growing your money in these channels now so you create a healthy financial future. Start with your debt and then grow each fund little by little and your stacks of money will accumulate into great amounts!