The 5 Smartest Places to Put Your Savings in 2024

A new year means a fresh start -- and for many, it means an influx of cash, too. Whether you received money for the holidays, got a bonus from your job, or got a raise at the start of the year, you now have to decide what to do with those dollars. Spending is always appealing, but you could get greater long-term value for your money by saving it. Here are five places you may want to put yours this year.

1. Your emergency fund

If you don't have an emergency fund or yours is pretty small, this is the best place for your extra cash right now. Emergency funds are a critical safety net that can help you avoid debt in the event of unplanned expenses. Without one, you may have to resort to loans or costly credit card debt to cover your costs.

Your emergency fund should contain at least three months of living expenses, and many prefer to keep even more here. Stash this money in a high-yield savings account so you can access it whenever you need to.

2. High-yield savings account

A high-yield savings account is also a great place for cash you plan to spend within the next few years on big-ticket items. It's generally not wise to invest this money because the stock market can be volatile in the short term. If you need to withdraw your cash at a specific time, you risk losing money if your investments are down.

Savings accounts can also help you grow your wealth. Your long-term returns won't be as high as what you could get by investing, but right now, they're still pretty impressive. Many of the best high-yield savings accounts are offering 4.50% annual percentage yields (APYs) or more. That could put $450 or more in your pocket in a year with a $10,000 initial balance.

3. Retirement accounts

Retirement accounts like IRAs and 401(k)s are great choices for savings you don't need for several years, if not decades. These accounts allow you to invest your funds while reaping significant tax advantages. The near term could bring ups and downs, but over the long term, many grow their nest egg significantly through retirement account investing.

Just make sure you understand the rules associated with these accounts before putting your money here. They have contribution limits and penalties for withdrawals before age 59 1/2. Roth IRAs also have income limits that prevent high earners from contributing directly to them. Make sure you understand all these rules before contributing so you don't run into problems with the IRS.

4. Taxable brokerage account

Taxable brokerage accounts enable you to grow your savings through investing without all the restrictions of retirement accounts. You can deposit as much as you'd like as often as you'd like, and you're free to withdraw your money whenever you want. You also have complete control over your investments.

However, you won't get the same tax advantages you would with a retirement account. You'll owe taxes on your contributions in the year you make them, and you could owe taxes on your capital gains as well. That depends on how long you've held your investments for and your annual income.

5. Health savings account (HSA)

Health savings accounts (HSAs) can serve as retirement accounts, and some even enable you to invest your money. But their primary purpose is to help you cover medical expenses. The money you put in these accounts reduces your taxable income for the year, and if you use it on medical expenses at any age, it's tax-free.

However, you can only contribute to an HSA in 2024 if you have a high-deductible health insurance plan. That's one with a deductible of $1,600 or more for an individual plan or $3,200 or more for a family plan. If this doesn't apply to you, you'll have to consider one of the other options above.

There's nothing wrong with splitting some of your savings between several of the accounts above if you're not comfortable putting all your eggs in one basket. Just make sure you consider all your options so you can place your money where it'll do you the most good.