What To Do With Money In Savings Account

What should you do with your savings? First, invest in your long-term financial health.

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Before you can figure out what to do with your savings, you'll need to build some.
A certified financial planner says the best way to save money is to start tracking your spending. Once you've been able to set some money aside, the first priority is paying off any high-interest debt.
Building an emergency fund is important too — those savings should be separate from the money you'll spend on your debt and other expenses.
Not sure how to build your savings? A financial planner can help. Use SmartAsset's free tool to find a qualified professional near you »

Most people would like to be saving more money.

Whether it's to pad an emergency savings account, to eventually buy a house, or to someday be able to take that dream vacation to Europe, it's the general consensus that the more you can save, the better.

If saving equals good stuff, then why is it so hard for us, in general, to save more? These days, things like student-loan debt and an overall high cost of living can stop people from reaching their ultimate savings goals.

Plus, it can be hard to get started, since you'll need to have a good understanding of your overall financials before you can actually plan to save more.

To that end, Molly Stanifer, a certified financial planner and financial adviser with Old Peak Finance, suggests tracking your spending, then mapping out a budget to include your additional savings.

Talk to a financial planner today to figure out the best savings strategy for you. SmartAsset's free tool can help you find a qualified professional »

The most effective way to track your budget is to write down every expense as you incur it, Stanifer said.

"Just like if you are bringing attention to your diet, it forces awareness," she said. "There are also apps — or perhaps your credit-card company or bank already does this — for tracking your spending after the fact. That type of tracking software is good for spotting trends."

What to do with your savings

Once you've tracked your spending and are starting to create a budget, Stanifer suggests using the following hierarchy of goals:

Pay down high-interest debt, such as credit cards.
Top up your emergency fund to a comfortable amount. Keep in mind that while the general guideline is still three to six months' worth of your essential expenses, the actual idea behind this goal is considering how long it would take for you to find a new job should you lose your current source of income. "If you are in a dual-income household or a high-demand industry, perhaps you would feel comfortable on the lesser side of three to six months," Stanifer said.
Max out your tax-advantaged accounts, like a 401(k), IRA, or 529.
Invest in a nonretirement brokerage account to further your savings.

If you're considering saving for a vacation or some other nonessential before you've established an emergency fund, paid down debt, or maxed out your retirement accounts, Stanifer suggests thinking twice.

"Sometimes we get focused on desires right in front of us and justify immediate gratification for sacrificing something that may be more beneficial to you in the long term," she said. "Take a step back and project what impact each financial decision would have" and consider shifting priorities if need be, she added.

As far as short-term savings goals go, Stanifer says a bank savings account or certificate of deposit should work fine. If you do plan to work with an adviser for long-term investments, though, Stanifer says to proceed with caution and "make sure they are putting your interests ahead of their own. NAPFA advisors are all CFP professionals and are fee-only, held to a fiduciary standard."

Find a fee-only financial adviser and get to work on your savings goals. SmartAsset's free tool can help you find a qualified professional in your area »

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Cheryl Lock is a personal-finance writer whose work has appeared in Woman's Day and Parents as well as online at USA Today, Forbes, and MarketWatch. She lives in Denver with her husband and two daughters. Follow her on Twitter at @CMLock42 and on LinkedIn.