2. They use the right accounts.
Where you stash your cash makes a big difference in how well it works for you. For money earmarked for retirement, maximize your contributions to tax-advantaged accounts: your 401(k), 403(b) or other employer-sponsored plan and/or Individual Retirement Account (IRA). If your employer offers a match, take it! All of it. It can have an exponential effect on your retirement balance over time. Also, it’s free money.
For your emergency fund (generally, 3-6 months of expenses) and other short-term expenses, stick with a high-yield savings account. For money you won’t need for a few years or more—to buy a home, say, or to start a family or side business—opening a regular brokerage account and investing in a diverse mix of stocks and bonds generally offers better returns.
