Beyond saving: Understanding your options for growing your money

When you think about your financial goals, what comes to mind?

Maybe it's having enough money to cover an unexpected expense without relying on credit. Maybe you're saving for a home, planning for your children's future, thinking about retirement, or simply hoping to create a little more breathing room between paychecks.

Throughout the year, we've explored ways to understand your spending, strengthen your credit, prepare for financial curveballs, and make decisions that reflect what matters most to you.

But what happens when you want to take the next step? How do you know where to put your money, which financial tools make sense for your goals, or whether you're ready to think beyond saving?

Verity's Community Financial Education Specialist, Tierra Bonds, shares how different savings options work, what it means to grow your money, and how to make informed decisions based on your own financial circumstances.

Because building financial security doesn't look the same for everyone. And understanding your options can be valuable, even if you're not ready to use them today.

Saving and growing your money aren't necessarily the same thing

We often talk about saving and growing money as though they’re separate stages of a financial journey. But you can actually do both at the same time!

When you put money into a savings account, you're setting it aside for a purpose. Depending on the account, that money may also earn interest. So even while you're saving, your money could already be growing.

The difference is really about what you need that money to do. Some money needs to be accessible for everyday needs or unexpected expenses. Other money may be intended for goals further into the future, where you have more time to explore additional options, including investing.

Rather than thinking about whether you should be saving or growing your money, consider how different financial tools can work together to support your goals.

And remember, building wealth isn't just about investing.

One common misconception is that wealth-building begins only after you've reached a certain income, paid off all your debt, or accumulated enough money to invest.

But building wealth starts with the foundations. Increasing your earning potential, reducing high-interest debt, strengthening your financial position, and creating more room between what you earn and what you owe can all be part of the process.

Wealth can also be built through homeownership, entrepreneurship, retirement savings, and acquiring assets that create opportunities for future generations.

Of course, income, access, and financial circumstances influence which opportunities are available. Not everyone starts from the same place. 

You don't have to wait until you have wealth to begin building it. Sometimes, strengthening your financial foundation is what makes future opportunities possible. 

In our September article, Financial Preparedness: Balancing Today's Needs & Tomorrow's Goals, we explored how spending, saving, borrowing, and planning work together. Understanding your savings options is another way to strengthen that overall picture.

Start with what you want your money to accomplish

Before comparing accounts, interest rates, or investment options, start with your goals.

Ask yourself:

• What am I saving for?
• When will I need this money?
• What do I need this money to do for me?
• How easily do I need to access it?
• What other financial responsibilities am I balancing?

For example, if you're saving for a vacation six months from now, you probably want that money somewhere accessible, where it can earn some interest without worrying about its value decreasing.

But if you're saving for retirement 20 years from now, you have a longer timeline and may want to explore options with greater potential for growth.

The purpose of your money should help determine where you put it, not the other way around.

What if your financial goals are competing?

Maybe you want to save for a home, build emergency savings, and pay down credit card debt.

All three are worthwhile goals, but when your resources are limited, it can help to consider which decisions could have the greatest positive impact on your overall financial position.

For example, addressing high-interest debt could reduce how much you're paying in interest each month, potentially freeing up more money for your other goals. That doesn't necessarily mean you have to stop saving while paying down debt.

Sometimes the best way to make progress toward a long-term goal is to first strengthen the financial foundation that will support it.

Get to know your savings options

Different savings tools serve different purposes. Some prioritize easy access to your money, while others may offer higher earnings in exchange for certain requirements or restrictions.

Here are a few common options.

Traditional savings accounts

A traditional savings account can be a place to keep money separate from everyday spending, while generally earning interest or dividends. Because funds are typically accessible, these accounts may be useful for emergency savings and short-term goals. 

High-yield savings accounts

High-yield savings accounts generally offer higher annual percentage yields (APYs) than traditional savings accounts. However, some have balance requirements, transaction conditions, or fees, and rates may change over time.

Before opening an account, make sure you understand what you need to do to earn the advertised rate and whether those requirements fit your existing financial habits.

Money market accounts

Money market deposit accounts may offer competitive earnings while allowing access to your funds. Depending on the account, minimum balance requirements, fees, or transaction restrictions may apply.

It's important to distinguish a money market deposit account from a money market mutual fund. They are different financial products with different risks and protections.

Certificates of deposit (CDs)

Certificates of deposit, often called CDs or share certificates at credit unions, allow you to set money aside for a specific period of time in exchange for a stated rate. They can be useful for goals with predictable timelines, but withdrawing money before maturity may result in a penalty.

Before opening a CD, consider when you'll need the money, whether the term aligns with your goal, and what happens when the certificate matures.

Look beyond the advertised rate

One common misunderstanding is that the account advertising the highest APY is automatically the best choice.

Annual percentage yield (APY) reflects how much your money can earn over a year, including compound interest. For example, a 4% APY doesn't mean you'll earn 4% every month.

Before choosing an account, consider:

• Are there monthly fees or minimum balance requirements?
• Do I need to complete certain activities to earn the advertised rate?
• Is the interest rate fixed, variable, or promotional?
• Are there penalties for withdrawing money early?
• How quickly can I access my funds when I need them?

A higher interest rate isn't necessarily more beneficial if the fees, restrictions, or requirements don't align with how you plan to use your money.

Learn more about savings accounts from the NCUA.

What does it mean when your money earns interest?

When you deposit money into an interest-earning savings account, the financial institution may pay you interest or dividends for keeping your funds there.

Compound interest is simply earning interest on your interest. Your money earns additional money not just on what you originally deposited, but also on the interest you've already earned.

Here's an example:Let’s say you deposit $1,000 into a savings account earning 4% interest annually, compounded once per year, without making additional deposits or withdrawals. 

• Year 1: You earn $40 in interest, bringing your balance to $1,040.
• Year 2: You earn $41.60 because you're now earning interest on $1,040 instead of just your original $1,000.
• Year 3: Your balance grows to approximately $1,124.86.

You haven't contributed another dollar, but your money continues growing because the interest you've earned is now earning interest, too.

Of course, actual results depend on the account's rate, how often interest compounds, fees, withdrawals, and whether you add more money.

Learn more about compound interest from the CFPB.

What about investing?

Saving and investing are both ways people prepare for future financial goals, but they work differently.

Eligible deposits in insured savings accounts and CDs are protected within applicable insurance limits. Investments, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs), involve risk and can lose value.

For long-term goals like retirement, investing may offer greater growth potential than traditional savings accounts, but returns aren't guaranteed.

Start with the fundamentals

You don't have to understand everything about the stock market to begin learning. 

Start by exploring basic investment options, how they work, and how they differ. Then consider what you're hoping investing will help you accomplish and when.

You can also explore resources through your employer. If your workplace offers a 401(k), 403(b), or another retirement plan, learn how it works, whether matching contributions are available, and what investment options it offers.

And remember, you don't have to invest money to start learning about investing.

Consider risk, time, and access to your money

Before investing, ask yourself:

• Risk: How much risk can I afford to take?
• Time: When will I need this money?
• Access: How easily can I access it?

Imagine two people. One is saving to purchase a home in two years, while the other is investing for retirement 25 years from now.

If the future homebuyer invests their down payment savings and the market declines right before they're ready to purchase, they may not have enough time to recover those losses.

The person investing for retirement has a longer timeline and may be more comfortable accepting market fluctuations in exchange for potential growth.

However, more time doesn't eliminate investment risk. Your circumstances and comfort with potential losses still matter.

The goal isn't to become an investing expert overnight. It's to build enough knowledge to make informed decisions when you're ready.

Explore the SEC's introduction to investing.

What if there isn't much money left over?

It's one thing to learn about savings and investments. It's another to find room for them when your income is already covering essential expenses, debt payments, and family responsibilities.

For some people, there genuinely isn't money left over. And telling someone to simply save $5 or $10 isn't helpful when they're already struggling to make ends meet.

Instead, start by understanding your overall financial picture and identifying what could create more room for savings in the future.

In Verity's PWR workshops, we use a financial wellness assessment that looks at four areas: Spend, Save, Borrow, and Plan.

This helps participants identify where they're doing well and which opportunities could have the greatest impact on their financial health.

For example, your biggest opportunity might not be reducing spending. It could be addressing high-interest debt, increasing your income, reviewing account fees, or exploring benefits and resources you didn't realize were available.

Once you've identified an opportunity, focus on one realistic next step rather than trying to change everything at once.

Financial progress doesn't always show up in your savings balance

In our mid-year financial check-in, we talked about how financial goals can change as life changes. The same principle applies here.

Reducing debt, improving your credit, avoiding fees, or using financial benefits you didn't know were available are all meaningful accomplishments.

And don't underestimate the value of financial knowledge and confidence.

Maybe you've learned to read your credit report, understand the terms of a financial product, or ask better questions before making a financial decision.

That's progress, too!

In PWR, we encourage participants to identify their next step and think about how they'll celebrate accomplishing it.

Building financial security doesn't always begin with putting money into a savings account. Sometimes it begins with making a decision that improves your financial position and creates more opportunities to save in the future.

Building financial confidence starts with understanding your options

There isn't one financial strategy that works for everyone.

Our financial realities, responsibilities, goals, and relationships with money are shaped by our experiences, upbringing, beliefs, and the challenges we've faced.

For some people, saving provides security. For others, spending represents freedom, enjoyment, or the ability to provide for loved ones.

Understanding your relationship with money can help you recognize how it influences your decisions.

One person may benefit most from paying down high-interest debt, while another may be ready to increase retirement contributions or explore investing.

Neither approach is automatically right for everyone. 

Financial wellness isn't about following someone else's roadmap. It's about understanding yourself, your circumstances, and the tools available to create a path that works for you.

And you don't have to figure everything out on your own. Your financial institution may offer educational resources, workshops, and opportunities to ask questions.

Keep building your financial confidence with PWR

Verity's Pathways to Wealth & Resources (PWR) workshops help participants better understand financial tools, explore their options, and make informed decisions about their money.

Our November virtual workshop series explores topics ranging from how we earn and store money to creating spending plans and understanding opportunities for long-term financial growth.

PWR Foundations: Making & Storing Your Money
Thursday, November 5 | 5:30–7:00 pm PT | Online
Explore ways to build multiple income streams, compare financial institutions, and recognize hidden fees and high-risk financial products.
Register for this workshop

PWR Building: Making Every Dollar Count
Thursday, November 12 | 5:30–7:00 pm PT | Online
Create a spending plan that reflects your priorities and values, explore strategies for managing debt, and learn to recognize risky lending practices.
Register for this workshop

PWR Generational: Making Your Money Work For You
Thursday, November 19 | 5:30–7:00 pm PT | Online
Learn how savings, investing, and building assets can support your long-term financial goals, such as owning a business or a home, and help create opportunities for future generations.
Register for this workshop

PWR workshops are free and open to everyone. Verity membership is not required. You can attend one workshop or participate in the full series.

Explore Pathways to Wealth & Resources

Looking for additional support? Verity members can explore our financial education resources, including financial coaching and support through GreenPath Financial Wellness.

_{^{Disclosure: The information provided in this article is for educational purposes only and should not be considered financial, legal, or tax advice. Individual financial situations vary. If you have questions about your specific circumstances, consider consulting a qualified financial professional.}}