Where do you have your money?

Not so long ago when the interest rates cost me more in taxes than the interest I was earning, I put some money for Christmas savings and vacation into a glass apothecary jar in my closet. When the interest rates climbed, I put the money into the bank.

This year, start a Christmas savings account or vacation account. This money will be used in the short term within six months to a year so you do not want to invest this in the stock market or other investment plan.

If you have a longer term savings goal then use a savings account as a tool to earn a little on your money and then transfer your savings into a CD. Most certificates of deposit offer better rates for balances of $1000 or more. Most offer better rates starting at $5000. A CD would not be the best way to save money for Christmas but it would be a good way to start saving for a home, or a great vacation every other year.

Online banks offer better interest rates. Start 2008 off right by saving some money for Christmas, a vacation or more practical uses like property taxes, income taxes or remodeling.

When you make a savings plan think of it as a diet. You may cheat once in a while but if you have a goal in mind if you keep working toward it you will reach your goal. Don’t set yourself up for failure. Instead of saying you MUST save 52 weeks out of the year or 26 if you are saving every other week, base your savings goal on a more manageable number of contributions: 40 weeks or 20. This way if you decide to treat yourself to something then you will still have an opportunity to enjoy a little treat and not feel guilty while still working toward your goal.