Understanding How to Manage Your Cash Better

For years, monitoring your cash and cash equivalent accounts was not worth your time as they yielded close to 0% interest. However, the conversation around cash has changed drastically since 2022, and it now pays to understand the difference between checking, savings/money market accounts (MMA), and money market mutual funds (MMF). A few easy adjustments in how your cash is positioned could generate thousands of additional dollars.

Checking and Savings/Money Market Accounts (MMA)

Most people are familiar with these traditional deposit accounts offered by banks. Checking accounts are used to pay bills, while savings and MMAs carry larger amounts of money for emergency purposes. These accounts are FDIC-insured, up to $250,000, which provides safety and liquidity. Although the interest or yield offered in these accounts varies from bank to bank, the current yields are generally between 1-2%.

Money Market Funds (MMF)

In contrast to traditional deposit accounts, MMFs are offered by investment companies such as Charles Schwab, Vanguard, etc., and pay higher interest rates. Although these accounts are not FDIC-insured like MMAs and checking accounts, the risk is extremely low as the pools of investments making up these funds include high-quality assets such as short-term treasuries, CDs, etc. These funds are easy to access through any major brokerage firm and are highly liquid, meaning they can easily be transformed back into pure cash for everyday expenses.

It’s important to understand the risk and rewards of MMFs. Currently, some MMFs yield close to 4.25-4.5%, which will likely increase over the next 6-12 months as the Federal Reserve continues to raise short-term rates to combat inflation. For example, on $30,000 of cash, the annual cash flow difference between MMAs and MMFs could be as high as $1,000. That’s a significant amount of money that could be generated with a few clicks of a button.

However, not all MMFs are equal. In addition, there are different minimum investment requirements, expenses, etc., so it’s essential to research each one carefully before investing. If you feel overwhelmed, consider seeking the advice of a Certified Financial Planner™.

To determine what MMF may be right for you, see the following links:

Charles Schwab


In summary, exploring MMFs as an alternative to traditional bank accounts can be smart. With just a few clicks, you can earn much more on your cash while still maintaining liquidity and safety. If you have large amounts of cash, it’s important to understand the difference between checking, savings/money market accounts (MMA), and money market mutual funds (MMF) to maximize your returns. Reviewing your financial goals, evaluating your risk tolerance, and seeking professional advice when making investment decisions is always a good idea. With the right approach, you can manage your cash better and potentially earn thousands more.

For weekly insights, follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.  


certified financial planner Marshall Clay wears a gray jacket and white shirt while posing for professional photo in office

Marshall Clay CFP, J.D., is a Partner and Senior Advisor at The Welch Group, LLC, specializing in providing Fee-Only investment management and financial advice to families throughout the United States. Marshall is a graduate of the United States Military Academy in West Point, New York, the Cumberland School of Law in Birmingham, Alabama, and is a CERTIFIED FINANCIAL PLANNER™.  In addition, Marshall is a frequent guest on local television stations as an expert on various financial planning matters.


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