The 3 Smartest Places to Put Your Money in February 2024

For many people, the concept of having extra money just doesn't exist. And it's easy to see why. Living costs have gotten very expensive on a broad scale. And for low and even moderate earners, there's often just not any money left over at the end of the month.

But if you're in a better financial situation, then you may be in a position to have money left over at the end of the month after accounting for all of your bills. And if so, here are some places to consider stashing that money.

1. A savings account

The economy is fairly strong today, but you never know when things might take a turn for the worse, resulting in more job loss across the board. And you also never know when you might encounter an unplanned expense, whether it's a car with a bum engine or a water heater that refuses to heat.

That's why it's so important to have cash set aside for emergencies. And the best place to put that money is a savings account. That way, you'll have access to it at all times, and you'll get to earn some interest on your cash along the way.

Plus, right now, savings accounts are paying pretty generously. If you look at online banks, you might easily find an APY of 4% or more. So if you have $10,000 you're earmarking for emergency expenses, that means during the year, you have the potential to earn a cool $400 on your savings, assuming rates don't fall.

And to be fair, they probably will fall, which we'll get into in a bit. But even so, you need money on hand for emergencies. Even if interest rates aren't as generous later in the year, it's extra money in your pocket nonetheless.

2. A CD

The Federal Reserve raised interest rates 11 times between March 2022 and mid-2023. And as a result, rates on savings accounts and certificates of deposit (CDs) have been elevated.

But during its last four meetings, the most recent of which took place at the end of January, the Fed opted to pause its rate hikes because inflation has been slowing. As such, the CD rates that are available today may not stick around for long. And once the Fed starts cutting rates, which may happen later in the year, CDs could start paying a lot less.

That's why now's a good time to open a CD. But don't just rush to open one at your current bank. Instead, shop around for the best rate you can find.

Also, you may want to ladder some CDs instead of locking all of your money up for the same term. Cashing out a CD early will usually result in a financial penalty, so it's best to ladder your CDs strategically.

Let's say you have $6,000 to put into a CD. Instead of opening a single 12-month CD tomorrow, consider opening a $2,000 6-month CD, a $2,000 9-month CD, and a $2,000 12-month CD. This way, you have money freeing up at various intervals.

3. An IRA

It's hard to focus on long-term savings when you may be struggling with bills in the present. But if you're in a position where you can afford to set money aside for your future, then it pays to put some cash into an individual retirement account (IRA).

The nice thing about traditional IRA contributions is that they shield some of your income from taxes. So if you contribute $2,000 this year, that's $2,000 of earnings you won't pay taxes on. If you fall into the 22% tax bracket, that $2,000 contribution saves you $440. Plus, you can then invest that $2,000 within your IRA and ideally grow it into a larger sum over time.

It's hard to not spend your entire paycheck at a time when costs are so high. But if you have extra funds at your disposal this month, consider a savings account, CD, or IRA.