Today’s question is from Jessica:
We recently moved into a home that needs work, we also received money from our tax refund and do not want to blow through this. Where should we put our money that will draw interest and be able to access if needed? This is the first time we will actually be able to save our tax refund instead of using it on our home taxes as our mortgage now is all included. -Jessica
Hi Jessica, getting a tax refund always feels good. Like you said, it is important not to blow through it and later find you could have used it more wisely instead of buying that big new toy you’ve always dreamed about.
If I were in your shoes, I would make sure our emergency fund is built up to what we would need should all other sources of income shut off for six months, especially if you are looking at making some sizable repairs to your house in the future that could be a drain on any excess income you have coming in.
I have always used either a money market account at our local bank or an online account that ties to my local bank that I could easily get to if needed for emergency fund and other savings. The reason was solely for the ease of access.
I never really took the interest rate into account (except for the fact that it was higher than the usual savings account) because quick access to me outweighed the return I would get due to interest because the account was not set up for long-term use, other than the emergency fund.
Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.
The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.