Last time we talked about doing a cash health check. Assuming you’ve gone through that article and have some money saved up. What now? What to do with that extra money that you have saved up for a rainy day? Throw it under the bed? Sure…if you like to lose money. How’s that you wonder? Inflation.

Basically, money depreciates. Remember when your grandparents would say “that used to cost a quarter back in my day!” Can you even buy anything for a quarter these days? Some of you may even be asking “what’s a quarter?” Haven’t seen one of those in a long time. Concept being that money loses value over time if you just let it sit there. Average inflation rate has been about 2-3% for the past 30 years, jumping up to 4% in 2023.

Example: 10 years ago, you saved up $10,000 and threw it in a shoebox and placed it under your bed. Due to inflation, that $10k would now only be worth about $7.5k. That’s right. You lost about $3.5k for leaving money sitting around doing nothing.

So, what can you do? Luckily, bank rates have improved drastically over the past couple of years. Five years ago, pre-pandemic, you were lucky to find anything that gave you better than a 1% return. Nowadays, a quick search will yield you rates hovering above 4% for the major players, and even above 5% for the more obscure ones.

Yes, sticking it into a banking account will at least mitigate some of that inflation damage. This is money that you have saved up for that rainy day. Money that you shouldn’t touch unless it’s an emergency. The least you can do is make sure the value of that money doesn’t go down.

So, lesson number 1: stick your money into the highest interest savings account that you feel comfortable with and let it grow. This is probably the safest option any person can do. Even safer than sticking it under your bed (house fires are a thing and you can kiss that cash bye-bye in an instant). Next up: CD’s. Stay tuned.