Apr 21, 2021 / Money Tips

Saving for Taxes? 3 Smart Reasons a Money Market Account Makes Sense

In case you haven’t heard, the 2021 Utah and federal tax deadlines have been extended to May 17. If you’re already looking for a better way to save for next tax season, or if you’ve just been looking for a smarter way to save up for any semi-major expense, a money market account can help you earn extra cash and give you a head start on your savings plan.

Better Rates

Money market accounts are tailor-made for saving for taxes. They offer better returns than most traditional savings accounts, which makes the hassle of saving a little less painful. And if you can find the right one (pro tip: Utah First Credit Union), you can get returns that are head and shoulders above what other banks and credit unions can offer. In that way, a money market account is the perfect account for large, infrequent expenses like taxes, vacations, big events (wedding season approaches), and holidays.

Safer Investment

There is some kind of financial poetry involved in having your savings federally insured while saving to pay taxes to the federal government. Sure, there are other ways to earn money with your money, like the stock market for example, but you’re never assured financial growth. And sometimes the risk isn’t worth the potential reward. With a money market account, your savings is shielded from the ups and downs of the market to the tune of (up to) $250,000 in federal insurance. At least Uncle Sam is doing something to help you pay your taxes.

Lesser Temptation to Spend

Let’s be honest. When your “savings” is commingled in the same account as your entertainment funds, it’s really hard to tell the difference between tax money and the next movie night or big video game release. You know you should be saving for taxes, but the dollars you set aside for your mortgage, your car payment, and everything else all seems to run together when you can only see one lump savings sum. A money market account that’s separate from your other savings and checking accounts lets you leave your tax savings (or whatever else you’re saving up for) alone. That way, it can grow with a better interest rate, free from your interference.

Saving for your next big purchase (even if it’s not until next tax season) is simpler and smarter with a money market account. If you’re ready to earn better interest, while safeguarding your investment from the volatility of the market (and yourself), open a money market account and start saving smarter today.