Editorâs note: This article first appeared in Money Matters, a newsletter from Britannica Money, on August 9, 2026.
How time, incentives, and a little friction can help your savings grow.
© Vividrange, Sergey Chayko, Anthony SEJOURNE/stock.adobe.com; Photo illustration EncyclopÊdia Britannica, Inc.
If someone offered you free money, youâd probably take it. But what if there was a conditionâthat you wouldnât be able to spend it for years?
That trade-off appears in more situations than you might think. Whether youâre setting aside money for retirement, saving toward another long-term goal, or helping make your childâs future more financially secure, some of the most effective savings tools reward patience instead of immediate access. As it turns out, making money harder to spend can be one of the smartest ways to help it grow.
The value of locked-up money
Several financial products encourage long-term saving by making it harderâor at least more costlyâto withdraw your money early. That extra hurdle can help you resist the temptation to spend today at the expense of tomorrow.
Retirement accounts, 529 education savings plans, certificates of deposit (CDs), and the newly launched Trump accounts all rely on that same idea. Each uses different rules, but all encourage you to leave your money invested until it achieves its purpose.
Trump accounts apply that principle from birth. Eligible children receive a one-time $1,000 federal contribution, and family members, employers, and others can contribute as well. The money is invested in a broad U.S. stock index fund, where it has years to grow before it can be used.
The difference is friction. Money sitting in a checking account is easy to spend. Savings that come with waiting periods, withdrawal penalties, or other restrictions require you to think twice before dipping in. That pause can help ensure your retirement, education, or other long-term goals are protected.
$2,400
How much additional money an employee earning a $60,000 salary would receive each year from a 4% employer match. Many 401(k) and other defined contribution plans require employees to contribute about 6% of their own pay to receive the full match.
How patience helps compounding pay
A $1,000 investment doesnât sound life-changing. Left to compound for decades, though, it can become something much larger. Thatâs why programs like Trump accounts begin at birth rather than age 18. Time, not necessarily the initial amount, is often an investorâs biggest advantage.
That growth doesnât happen overnight. Compounding works best over decades, giving investment earnings time to generate additional earnings. Thatâs why long-term savings accounts encourage investors to stay invested until the money is needed.
The trade-off is access. Many of these accounts limit when you can withdraw money or impose taxes or penalties if you take it out early. Those restrictions help keep long-term plans from being sidetracked by short-term spending.
Urgent money needs are better met by establishing an emergency fundâa pool of savings set aside for unexpected expenses and kept in an account you can access quickly. But for money youâre saving for years or decades from now, a little friction can make it easier to stay on track.
Where free money comes from
Trump accounts arenât the only savings vehicles that come with free money. Employers as well as state and federal governments may also contribute to retirement, health, and education savings accounts.
- Employer matching contributions. Many employers reward saving by matching your contributions or adding money directly to eligible workplace accounts, including retirement plans, health savings accounts (HSAs), and flexible spending accounts (FSAs).
- The saverâs match. Beginning in 2027, eligible savers may receive a federal matching contribution of up to $1,000 toward retirement savings. The new program replaces the saverâs credit by depositing the governmentâs matching contribution directly into a qualifying retirement account rather than providing a tax credit.
- 529 plan grants and matching contributions. Several states encourage saving for college by providing matching grants or seed deposits to eligible 529 accounts. These programs vary by state and often have income or residency requirements, but they all reward families who save for future education expenses.
Putting your plan to work
The best savings strategy isnât about finding one perfect account. Itâs about matching each financial goal with the right mix of flexibility, incentives, and time.
- Keep cash handy. Maintain an emergency fund in an easily accessible account so unexpected expenses donât force you to raid long-term savings.
- Claim free money. If your employer offers a 401(k) match (or youâre eligible for another savings incentive), take advantage of it whenever possible.
- Start now. Even small contributions can benefit from years of compounding. Waiting for the âperfectâ time to begin often costs more than starting modestly.
- Use the right account. Use accounts designed for long-term objectives when saving for retirement, education, or other future expenses, and reserve flexible accounts for near-term needs.
The right account wonât guarantee success. But starting early, staying invested, and taking advantage of free money can all improve the chances of reaching your long-term financial goals.
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This article was most recently revised and updated by David Schepp
