Your Money Should Always Be Making Money

When I was in graduate school, I taught a class in public financial management. The most fundamental concept I emphasized—and still do when I work with organizations around their financial management—is this: working the float.

Any organization—nonprofit, government agency, business—needs to maximize the cash it has on hand. In the 90s, there were options for larger entities to park money even for 24 hours to earn interest. Even small amounts of money parked for short periods add up. It’s one of the most basic principles of sound financial management.

Here’s the irony: despite understanding this concept deeply, I didn’t start using a high-yield savings account personally until the early 2000s. I didn’t think there was an option for regular people. I assumed the only choice was CDs, and I’d use them from time to time, but it always made me anxious to have that money locked up. What if I needed it?

I only found out about high-yield savings accounts when I switched banks and the new bank mentioned it. That’s when I realized I could profit on the float—just like I’d taught others to do—without sacrificing access to my money.

If you have cash sitting in a regular savings account earning almost nothing, you’re leaving real money on the table

Not life-changing money, but real money. And it takes almost no effort to fix.

A high-yield savings account is simply a savings account that pays a significantly higher interest rate than traditional bank savings accounts. That’s it. No catch, no complexity.

The key characteristics: It’s FDIC insured up to $250,000—just as safe as any bank account. It’s liquid—you can access your money anytime without penalty. The rate is variable, meaning it changes based on Fed rates and bank competition. And it’s usually offered by online banks or brokerage houses rather than traditional brick-and-mortar banks.

Money market accounts work essentially the same way for practical purposes. They may have check-writing or debit card features, but the core benefit—higher yield plus full liquidity—is identical. I use a money market through my brokerage.

Let me show you what this looks like in real dollars

Right now, a major national bank I looked at today—early 2026—pays 0.01% APY on their standard savings account. That’s not a typo—one one-hundredth of a percent. Meanwhile, high-yield savings accounts from online banks are paying around 4% APY, with some above that.

Here’s what that difference means for your money:

If you have $5,000 sitting in a traditional savings account, you’ll earn about 50 cents in a year. In a high-yield account at 4%, you’ll earn $200. That’s $199.50 you’re just not getting.

At $10,000, the difference is about $399. At $25,000, it’s nearly $1,000. At $50,000, you’re leaving almost $2,000 on the table every year.

That’s real money for doing essentially nothing except moving your cash to a different account.

The reason most people don’t do this is simple: they don’t know it exists

Or if they’ve heard of it, they think it’s only for emergency funds. They don’t realize it should be part of their basic financial system for all kinds of cash.

Here’s the insight wealthy people figured out a long time ago: your money should always be earning something. It’s not that they’re doing anything exotic or complicated. They just have a basic system that ensures every dollar is working. Cash for short-term needs? In a money market. Cash for medium-term goals? In a high-yield account or bond fund. Long-term money? Invested.

Most regular people don’t have this system because they don’t know these options exist, they think you need a lot of money to access them, or they assume “investing” is the only way to earn on cash—and investing feels risky.

The objection I expected to hear was “But shouldn’t I be investing that money?”

That’s not what I actually hear. The real hesitation is: “I don’t want to do a CD because I need to have the money handy, and I don’t know how else to earn something safely.”

A high-yield savings account solves exactly that problem. You don’t have to choose between CDs (locked up) and investing (risky). An HYSA gives you a guaranteed return with full liquidity.

Speaking of CDs—I would never recommend one over a high-yield savings account

What you lose in liquidity isn’t worth it. CDs lock your money for a fixed term—anywhere from three months to five years. Early withdrawal penalties can wipe out your interest gains. And current CD rates aren’t significantly higher than HYSA rates anyway—often within a quarter to half a percent.

A couple of years ago, I had cash I needed to hold for six months and didn’t want any risk. I used treasury bonds. Honestly, it wasn’t that much better in terms of the interest rate, and the lack of liquidity was very unnerving. The freedom of knowing I can access my money whenever I need it—that’s worth a slightly lower rate.

So when should you actually use a high-yield savings account?

Most people who have one only use it for their emergency fund. That’s a good start, but it’s thinking too small.

Use it for your emergency fund—three to six months of expenses, accessible but earning.

Use it for money you’re saving toward a known expense in two to five years—a home renovation, a car purchase, helping a kid with a down payment. This money shouldn’t be in the stock market because you can’t afford a 30% drop right before you need it. But it also shouldn’t be earning nothing.

Use it for cash you’ve set aside for a big purchase that’s already earmarked but not ready to spend yet.

Use it for estimated taxes if you’re self-employed or a small business owner. Your quarterly tax payments may sit for months before you send the check to the IRS. Why not earn on that money in the meantime?

Use it for transition money—holding cash while you figure out what to do with an inheritance, a bonus, or proceeds from selling investments.

Use it for flexibility—maintaining a larger cash cushion because you’re in midlife and want options. As I wrote in the Recovery Assumption piece, having accessible cash becomes more important when your timelines get shorter and your life gets less predictable.

This is a tool — not a plan

A high-yield savings account can protect you from chaos.
It can give you breathing room.
It can keep you from going into debt when life happens.

But it is not designed to build wealth.

Its job is stability — not growth.

Opening one takes about fifteen minutes

Go to the large, well-known companies. Not because I make any money from recommending them—I don’t—but because they’re easy to use, quick to set up, and you won’t have to worry about whether they’re legitimate.

Online banks like American Express, Marcus (Goldman Sachs), Ally, Capital One 360, and Discover all offer high-yield savings accounts. Brokerage houses like Fidelity, Schwab, and Vanguard offer money market funds or sweep accounts that work the same way. Many credit unions offer competitive rates too.

The process: open an account online, link your existing checking account, transfer money in. Done.

Two things to check before you sign up:

First, make sure the APY is actually high. Not all “savings accounts” are high-yield. In the current environment, you should be looking for 3.5% or higher. If a bank is advertising 0.5%, that’s not what you want.

Second, check for minimum balance requirements and fees. Some accounts require a minimum balance to earn the advertised rate or to avoid monthly fees. Look for accounts with no minimum balance and no monthly fees—American Express, Ally, Marcus, and Fidelity’s money market all fit this description.

A few mistakes to avoid:

Don’t chase the absolute highest rate. The difference between 4.00% and 4.35% is minimal on most balances. Pick a reputable institution and move on. Rate-chasing creates hassle and potential for error.

Don’t put money you’ll need this month in an HYSA. Transfers take one to two business days. Keep your immediate-need cash in checking.

Don’t ignore the minimum balance requirements if the account has them. Some accounts penalize you for falling below a threshold—make sure you understand the terms.

And don’t overthink this. The goal isn’t to optimize every last basis point. The goal is to stop leaving hundreds or thousands of dollars on the table every year for no reason.

Where does this leave you?

If you don’t have a high-yield savings account or money market, open one this week. It takes fifteen minutes.

Move your emergency fund there if it isn’t already.

Then think about what other cash you have sitting around—tax savings, upcoming big purchases, money you’re holding while you figure out what to do with it. Move that too.

Make it part of your basic system. Wealthy people don’t let money sit idle. Neither should you.