The 4 Smartest Places to Put Your Money in September 2023

It's unfortunate that many Americans these days are struggling to make ends meet. Recent data from SecureSave, in fact, found that 63% of workers don't have enough cash on hand to cover a $500 emergency expense.

But if you're in a strong enough place where you have extra money to stash away after covering your bills, then it's important to find the right home for it. Here are some great options to consider this month (or even in the future for when your financial picture improves and you have more extra money at your disposal).

1. A high-yield savings account

What would you say if someone were to offer you the chance to earn anywhere from 4.25% to just over 5% on your money with no actual risk attached? These days, those are the rates you're looking at if you open a high-yield savings account. So if you have money you're looking to stash someplace safe so you have it for emergency expenses, like home and car repairs, then a savings account is a good bet. Your deposit is protected for up to $250,000, provided your bank is FDIC-insured.

Now there are ways to earn a higher return on your money, and we'll get into those in a minute. But funds that are earmarked for unplanned bills need to be accessible to you at all times. And you don't want the value of your money to fluctuate based on market conditions, which is what happens when you invest. So for your emergency fund, stick to a savings account.

2. A certificate of deposit (CD)

Based on today's CD rates, you might earn a slightly higher interest rate on your money than with a regular high-yield savings account. But is a CD right for you? Well, that depends on what your money is for.

You'll typically be penalized for cashing out a CD before it matures. So you generally don't want to put your emergency fund into a CD, because you might need that cash at any time.

But if you have money you're saving for a longer-term goal, rather than unplanned bills, then a CD could be a good bet. While you're committing to keeping your money tied up until your CD comes due, you're also guaranteed the interest rate you lock in. With a regular savings account, your bank could decide to start paying less interest at any time.

3. An IRA

Money you're socking away for retirement should sit in a tax-advantaged savings plan like an IRA. With a traditional IRA, the sum you contribute will exempt some of your income from taxes -- provided you don't exceed the annual limit, which right now is $6,500 for savers under 50 and $7,500 for savers 50 and over. So a $2,500 IRA contribution, for example, means you're not paying taxes on $2,500 of your earnings this year.

You should know, however, that IRAs impose a 10% early withdrawal penalty for tapping your money prior to age 59 ½ (though there are limited exceptions). So make certain you're really sure you want to keep your money earmarked for retirement before making an IRA contribution.

On the plus side, IRAs allow you to invest your money in stocks and other assets to grow your balance into a larger sum over time. You might earn a much higher return on your money with an IRA than with a regular savings account or CD.

Granted, the value of your IRA might fluctuate over time based on market changes. But because you might end up investing in an IRA over many decades, you have time to ride out stock market downturns and come out ahead.

4. A 401(k)

A 401(k) plan generally has the same rules and offers the same benefits as an IRA, with one key exception -- the annual contribution limits are higher. This year, you can put in up to $22,500 if you're under 50 or $30,000 if you're 50 or older. (For many of us, that's unattainable, but it's still good information to have.)

Another difference between a 401(k) and IRA is that with the former, you need an employer to offer you access to a plan (unless you're self-employed and eligible for a solo 401(k) plan). But, many employers like to incentivize employees to sock money away for retirement by matching contributions to some degree. In other words, fund a 401(k), and you might score some free cash in the process.

Saving money in any sort of capacity is a wonderful thing. But it's important to find the right home for your money. As a general rule, money you're saving for emergencies should sit in a savings account, money for mid-term goals that you don't want to invest should sit in a CD, and retirement money should sit in an IRA or 401(k) plan for the tax benefits these plans offer.