Choose where to save or invest your money to cover family needs and reach your short- and/or long-term goals. You will want to keep some immediately available in cash reserves, use some to prepare for emergencies and insure your family against loss, and place the rest in fixed or equity assets that will grow in value.

Cash reserves. Experts advise keeping three to six months of living expenses in cash or cash reserves to cover basic living expenses in case wages are lost, for financial emergencies, or for short-term goals. Your cash reserves will probably be in checking, savings, and/or money market accounts.

Cash or cash reserves refers to any type of investment that enables you to "park" your money and earn interest on it. Your cash should be liquid, or readily convertible into spendable dollars on short notice.

Cash reserve investments provide you with peace of mind and are especially attractive when short-term interest rates are high.

Examples of cash reserve savings investments are:

• NOW checking account

• Passbook (statement) savings accounts

• Money market deposit accounts

• Certificates of deposit (CDs) (short-term)

• Money market mutual funds

• Treasury bills

Fixed assets are referred to as money invested at a fixed rate of return, usually for specific lengths of time. The value of the asset doesn't change. Examples include most certificates of deposit, treasury bills, and some savings bonds. Although they may be a short-term investment, they are not immediately liquid without a penalty.

Equity assets are investments in which both the value of the investment and the rate of return may change. Buying a home, stocks, bonds, and some mutual funds are examples of equity assets.

Usually, equity assets are used for saving for long-term goals. (More information about these will be discussed in Basic Investment Options)

Once you know your financial goals, before you choose where to put your cash for safekeeping, ask the following questions about your savings and investment options:

If I deposit my entire check in the checking account, will there be enough left to save?

Money in most regular checking accounts earns no interest, and it is a temptation to spend all of it. If you can learn to pay yourself first, you will be on your way to establishing good savings habits. If you're trying to save for a long-term goal and don't want to be tempted, you may want to choose an option that's inconvenient to convert to cash. Arrange to have your employer invest a percentage of your check each pay period in a tax-deferred saving plan or have the bank automatically place a specified amount in an account each month or pay period. You won't spend what you don't see.

How much money do I really need to have available to me on a one-day notice in case of possible emergency?

Do you need three to six months worth of living expenses available at all times, or will you be able to anticipate the need and withdraw your money ahead of time? This is important to consider when using CDs and some money market accounts.