How to Keep Your Money Safe in 2023

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If the current economic situation has you concerned, you’re certainly not alone. High inflation rates, concerns about an imminent recession, and recent bank failures have all made for a turbulent economic climate. While market uncertainty can have several consequences, a primary one at the forefront of many people’s minds is their money—and how to best protect it.

Investment losses may be inevitable as the market ebbs and flows, but there are certain moves you can make to protect your savings. We'll cover some ways to shield your money during an uncertain economic market and what you should know. 

5 Ways to Keep Your Money Safe

Here are five actions you can take to keep your money safe in 2023:

• Revisit your budget.
• Opt for high-yield savings accounts.
• Be mindful of FDIC and NCUA insurance.
• Stay the course for long-term goals.
• Consider low-risk assets if your time horizon is short.

1. Revisit Your Budget

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Whether you’re concerned about potential layoffs or just looking to shore up your emergency fund, revisiting your budget is a good first step toward keeping your money safe.

Look at your discretionary expenses, and see if you can afford to reduce your monthly spending in any categories. That may mean buying generic brands instead of name-brand groceries, or opting for cheaper travel plans. You may find there’s some money in your budget you can reallocate to boost your savings, providing you with some helpful assurance in an uncertain economy.

2. Opt for High-Yield Savings Accounts

Financial institutions often raise their deposit account rates when the Federal Reserve hikes interest rates, which has happened 10 times since March 2022. You’ll generally see the highest rates on savings accounts from online banks, as they don’t have the overhead costs associated with physical bank branches. For instance, it’s possible to find a savings account with a rate above 4% right now, which could give you hundreds of dollars in interest earnings, depending on your balance. 

To find the best possible high-yield savings account for your situation, look at rates, minimum balance requirements, fees, and account features. Be mindful of fees, especially, as those could eat into your interest earnings.

Check out our top picks for high-yield savings accounts to simplify the process of finding a new account. 

3. Be Mindful of FDIC and NCUA Insurance

It’s important to be mindful of Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) insurance, whether you’re a super-saver or just trying to build a small nest egg. Most banks and credit unions in the U.S. carry this insurance, and it protects your deposit account balances of up to $250,000 in the event an institution fails.

If you’re planning to open a new high-yield savings account, review prospective institutions’ websites and determine if they provide deposit insurance. (You’ll likely see FDIC or NCUA information displayed in the page footer of each institution’s website.) If not, it’s wise to seek out an alternative. 

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Also take note of the amount of insurance offered, especially if you have a high account balance. If your balance is close to exceeding the max FDIC or NCUA insurance amount, consider moving some money into an account at a new bank or credit union. This way, your money will be fully insured should the unexpected ever occur.

4. Stay the Course for Long-Term Goals

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There are few things worse than feeling powerless as your retirement savings tanks. It’s both discouraging and panic-inducing. But if you don’t plan to access your money for several years or even decades, sometimes it’s best to stay focused on your investment strategy and keep on working toward your long-term investment goals. It’s generally a smart choice to avoid pulling your money out of the market, even if it’s scary to see your portfolio declining. 

If you’re concerned about your retirement savings, you may also want to speak with a fiduciary financial advisor on the best path forward. Unless a very high portion of your portfolio is invested in high-risk assets, they’re likely to tell you to stay the course (think: precious metals, ETRs, real estate, and other alternative investments). 

5. Consider Low-Risk Assets in the Short Term

If your time horizon is short, on the other hand, it may be wise to reallocate a portion of your investment portfolio into some lower-risk assets. Consider putting some of your money into bonds or bond funds, as these assets have performed well historically when stocks are down. 

But it is worth noting that bonds can lose value when the Fed makes significant rate hikes, which happened in 2022. While the Fed is expected to continue increasing rates this year, the rate increases are expected to be less significant. And though it’s impossible to predict future performance, experts are predicting that bond prices will stabilize a bit in 2023. 

Certificates of deposit (CDs) and money market accounts (MMA) are other fixed-income assets worth considering if you’d like to diversify your portfolio. Brokered CDs are another option, which can be purchased through brokerages, and they typically offer higher rates than bank CDs. These assets provide steady returns, which can offer some helpful peace of mind during a volatile market.

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The Bottom Line

While you can’t control the economy’s ebbs and flows, you do have control over how you respond in a turbulent market. Make the time to revisit your budget, consider moving your money into high-yield savings accounts to earn a generous rate on your balance, and be mindful of FDIC and NCUA insurance limits. If your savings balance exceeds $250,000, it’s wise to spread your money across multiple bank accounts at different institutions.

From an investing standpoint, consider staying the course if you don’t plan to touch your money for many years. If you’re fairly risk-averse or your time horizon is shorter, you may want to opt for lower-risk fixed-income assets like bonds or CDs as an alternative to riskier investments. 

Frequently Asked Questions

• Where is the safest place to keep your money?

  In general, an insured deposit account at a traditional bank, credit union, or online bank is one of the best, most secure places to put your cash. Most financial institutions are insured by the FDIC or NCUA for balances up to $250,000, so even if your bank goes under, your money should be safe.

• Where should I put my money instead of a savings account?

  A savings account is generally a smart choice for an emergency fund, as you can easily access your cash if you need to cover an unexpected cost. But if you have sufficient money in your emergency fund, you could consider putting some money into a CD account with a decent rate, padding your retirement savings, or opening a taxable brokerage account.

• How much cash is too much to keep in the bank?

  If you have a savings balance that exceeds $250,000, it’s smart to distribute your money across multiple banks and accounts. That’s because the majority of banks and credit unions offer up to $250,000 in FDIC and NCUA insurance coverage. If you keep all your money in one place, the difference between $250,000 and your larger balance may not be recoverable if your financial institution fails.