Saving money with a certificate of deposit

A Encuesta reciente found that nine in 10 Americans typically save around $1,000 a month for dedicated financial goals, but sometimes a little extra comes your way via a tax refund, work bonus, graduation gift or wedding gift.

Why not put that money to work for you? A certificado de depósito (CD) is one way to grow that money without the worry of fluctuating market conditions.

"With CDs, you're guaranteed a fixed interest rate for a set period of time, regardless of what the market is doing. So, you don't have to worry about being subject to market volatility," said Stacy Arriaza, consumer pricing strategy manager at BOK Financial®. "It's also FDIC insured up to $250,000, so it's a low-risk option."

Is a CD right for you?
Although anyone could benefit from putting money in CDs, some consumers might use them to adhere to their specific risk tolerance. As Arriaza said, "A CD is a good option for someone who is new to investing or who isn't comfortable with the risk of market investments."

She added that it could also help discipline a spendthrift. "Since your money is locked in for a set time and there's a penalty for taking it out early, a CD can actually help you stay disciplined and stick to your savings goals."

Consider a tangible goal
While saving for emergency funds and retirement are the number one reasons people put away their hard-earned cash (according to the Encuesta), it often doesn't feel very fun.

However, knowing there's a reward at the end of the road can be an incentive to put a little extra away-and build a solid savings habit. You could use the extra money to buy concert, sporting event or amusement park tickets, splurge on a dinner out or get an early start on holiday shopping. You could also take advice from one of the most idolized investors of all time, Warren Buffet, who suggests using money to invest in yourself by learning new skills and becoming your own best asset.

Let it grow
If you’re saying to yourself that $80 doesn’t feel like a lot with today’s high prices, it can add up to more if you keep saving.

"One of the best ways to enjoy the money you earn is to let it compound and grow over time," Arriaza said. "By allowing the CD to renew at the maturity date, you'll earn interest on what you've invested, plus the interest it has earned. Maybe then you can use this long-term savings strategy to accumulate savings for a major purchase, such as a vacation, a wedding or a home upgrade."

You could also start to implement strategies such as CD laddering, which involves staggering CDs to mature at different times, so you always have money available.

"This approach helps you manage the timing of when your funds become available, giving you regular access to cash as each CD matures," said Arriaza. "CD laddering offers a great balance between timing and flexibility, while allowing you to take advantage of potentially higher rates over time to maximize your return on investment."

Ways to save
If this all sounds too difficult because you struggle to commit to saving money, you might try automating a portion of your paycheck into a savings account. If there isn't anything to spare, sit down and review your expenses to see if you're spending money on things you don't need (we see you streaming services and subscriptions!) and then you could reallocate and automate that same amount into your savings account every month. Once you reach a savings goal, then you can consider a new CD to commit to growing those funds.

Arriaza said when you put money into a CD, you can give yourself a pat on the back for being a consistent, dedicated saver. "Every time you log into your bank account and see it there, you have that peace of mind."