When it comes to the money that you set aside for annual or semi-annual payments or for emergencies where you need extra cash quickly, where do you keep it? Drawing funds from any of your savings or investment accounts is something you may not want to do since there may be a penalty for early withdrawal or it might be financially disadvantageous at that time.

Here’s another question. Are you setting anything aside in case you need to pay the deductible on an insurance claim?

In a money market account where interest rates are most often higher than savings accounts and are more accessible is a good place for you to put funds for infrequent payments or for possible emergencies. Some banks offer even higher rates on Internet money market accounts. Checking your bank’s rates on various types of accounts to see which would be best is a must. It’s good to compare banks. You never know, there could be a big difference. A higher balance is required in money market accounts but the amount you will need to keep in it will more than meet that.

In money market accounts, the good thing about it is that even though there is a limited number of checks you can write on it in a given time period, it is usually more than enough for most people.

Planning your budget would mean that you will need to make payments to this account until the balance is sufficient to cover your home and auto annual or bi-annual payments and cover all your deductibles for your home, auto, medical and dental policies. Once this account is fully funded, the interest earned will be able to reduce your monthly budget payments that go to replace that which was used for insurance payments or for emergencies.

With this account in place, you will be able to take the highest deductible allowed thereby reducing your monthly insurance payment. You will now be able to make an annual payment, saving on the service charges if you pay your auto insurance quarterly or twice a year.

It is definitely better than most savings and checking account interest rates even though money market accounts may not earn the kind of return as a mutual fund or other types of investments. Money market accounts have the advantage of easy access for your infrequent financial needs.

You can give yourself some efficient financial security by enabling your money to work for you in several ways as long as you have a little self-discipline.

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