Money market rates: what a difference a point makes

How do you know when it's time to take the next step with your savings? If you've been tending that nest egg for a while, you may be reaping the benefits: a better night's sleep, for one.

But it's also important to monitor the rate your savings is earning and evaluate whether a move might mean more money for you. Changing from a traditional savings account to a money market account is one way to put more money in your wallet at the end of the year.

With this added income, you can make small--but meaningful--improvements to your life.

Move to a money market account for quick change

Let's say you decide to move a $10,000 nest egg into a money market account from a traditional savings account, and you see an increase in earnings from 0.25 percent to 0.55 percent. That 0.3 percent increase brings $30 more into your wallet each year.

You may be unimpressed: "What can I do with $30?"

How about make your life better? Consider these ideas:

1. Two new books from Amazon.com or your favorite retailer. There's a saying about how you'll be the same person in five years except for the people you meet and the books you read. Add a couple of nonfiction books to your repertoire, and learn more about your job, your hobbies or personal finance!
2. A thrift-shop makeover for your home. Add a run to Goodwill or the Salvation Army in the springtime, and look for new decor: a lamp, a picture for your bedroom, a couple of chairs.
3. A slow cooker. Save money by changing how you prepare meals, eating in more, packing leftovers for lunch and freezing dinners for later in the month.
4. A pocket tool like Leatherman. Do more quick fixes around the house to save money you'd pay a handyman, or even more money you'd pay in an emergency. (You may combine this with a copy of Home Maintenance for Dummies!)
5. Pay it forward. Keep that money in your account, and it will earn dividends or interest as well, through the magic of compound interest.

High-interest savings yields more options

Now let's say you move your traditional savings account into an online bank with a high-interest money market account option, and you increase your interest rate by a full percentage point. Your income from that $10,000 account can increase by $100 a year.

Now we're talking!

How can $100 improve your life? Take a look:

1. Protection for your critical digital and paper assets. Buy a backup drive or pay an online computer-backup service to ensure all your digital files--photos, music, financial documents--are safe. Get a fireproof box or rent a safety deposit box for passports, birth certificates, wills and other documents you can't afford to lose.
2. A programmable thermostat and low-flow plumbing. Maximize your savings by cutting down on utility bills.
3. Online training in a new interest. Numerous companies offer training priced for an online audience--software training from Lynda.com, for example.
4. Get fit. Pay the registration fee for your local gym and work on physical as well as fiscal fitness.
5. Just like number 5 above, let it roll and continue to accumulate earnings.

Of course, the best thing you can do to save money is to leave it alone. The next best thing is to use the additional income earned to invest in small improvements that can have a big effect on your life.

• Take control of your banking and determine if it's time for a change
• Understand the basics of money market accounts
• Consider whether chasing the best online savings rates is always a good idea

• Get started saving by finding the best savings account now
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