Over the past few month and years a lot of our tossing and turning at nights are caused by us worrying over what should we invest in a Passbook Saving Account or Money Market Account if we got handed our pink slips and were unable to work for a certain amount of time, either through being laid off or illness. In times of adversity, you don’t want to be shaking those few pennies out of your son or daughters piggy bank. Having financial security net in place can make sure that you’re protected when a financial disaster happen. One way to achieve this is by setting cash set a side; a collection of readily available funds that will help you meets emergency or highly critical short-terms needs. This money that you set a side is your first step in saving. It too can be producing some extra money through interest; you would like to be able to have access to it if the need arises. That is what I mean by the use of the word “EXTRA CASH.” It can be in form of some type of saving account or investment, as long as you can get to it without encountering penalties for untimely withdrawal.

I suggestion that you at least have three to six months’ worth of living expense in your cash set a side. The true amount, nonetheless, should be established on your particular situation. Are you paying on a mortgage? Do you have short-term and long-term disability protection that you can get a hold of if you were very sick, hurt or disabled? Do you make car notes payments? Additional issues that you should be thinking about is too include your job security, health, and income. The Bottom Line: Without an emergency fund set a side you will be totally cashless devastated.  You’ll want to make sure that you have access to that extra cash when time arises. In spite of this, an FDIC-insured, low-interest saving account isn’t your only choice. There is much other selection to choose from, each with very special advantages, For example, Money Market Account or Short-Term CDs will on the average offer higher interest rates than saving account, with very little, if any increased risk. I will discuss these more.

PASSBOOK SAVING ACCOUNT

These type of account are generally most recently comes with an interest rate of 0.25% (2009) the same as they have always been and very easy to open, they are very appropriate and can be opened at any type of bank affiliated with your checking account, you can set up automatic payment options into the account, that will allow you to get the money. This type of account does pay interest, but pays the lowest rate of return. But make sure that you choose not to have that affiliated with your checking account—because one of great shopping spree that you take will automatically erase your account out. So consider only using this type of account only up to three to six month to acquire some extra cash not on a long term basis.

MONEY MARKET ACCOUNT

Money Market Account is another type of saving account that is offered by banks and credit union: Once you’ve acquired enough money from those three to six months worth of extra cash funds that requires a minimum balance—averaging between $100 and $2,500, you should now have enough to move it to a money market account that is offered by FDIC-insured financial institution which has an interest earning saving account with limited transaction privileges. This type of account will give you more bang for your bucks and usually pays you more than a normal saving account. You must maintain a certain balance, should an emergency situation happen if you need to take some money from the account because the more money you have in the account the higher the interest rate you will get. You can set up one of these low risk accounts at most financial Banks. We’ll be looking at mutual funds in my next posting on May 20, 09.

                 UNTIL NEXT TIME HAVE A BLESS DAY!

AL Wimberly

Email:al4uever@yahoo.com