Share certificates, also known as "certificates," can be excellent tools used to optimize earnings on your savings. They offer higher yields than the average savings and money market accounts, with the caveat that funds are locked for a set amount of time. Early withdrawals usually result in fees.

However, you can avoid some of the inconvenience of locked funds and create a regular flow of cash accessibility with a certificate ladder. If you’re holding money that you plan to spend sometime between the next few months and next few years, a certificate ladder may make sense.

Certificate ladders can hold and grow funds for:

• A project that will be implemented and paid in stages
• Expenses and payments due at regular intervals, such as tuition or taxes
• A series of unique financial goals with varying time frames
• Reliable, supplemental earnings

The benefit of a ladder is that it allows regular opportunities to access cash and reassess your strategy while still taking advantage of some of the higher yields typically found in the longer term certificates.

Planning your ladder strategy

There are a few common types of ladder strategies, but you can always choose to customize your ladder based on how much money you want access to and when, the current and anticipated yields, and your unique goals and timelines.

To get started, ask yourself:

• What is the purpose of my certificate ladder?
• When and how often will I need to access my money?
• How much money will I need at each interval or access point?
• Am I willing to sacrifice some flexibility for better yields?
• Am I willing to sacrifice better yields for more flexibility?

Traditional ladders — slow and steady

Traditional ladders take an even-keeled approach, slow and steady to win the race toward long term yields.

Start by equally dividing a sum of money into separate certificates with equally spaced maturity dates. For example, take $5,000 and open five certificates with maturity dates set one year apart. Deposit $1,000 in each, with the last thousand in a five-year certificate.

Then, as each certificate matures, reinvest those funds in a new five-year term, continuing the process until all accounts are set for five years and are ideally earning optimal yields.

This way, a portion of funds becomes available once every year. This may not offer a lot of flexibility, but it will give you more opportunities to access your money and reassess your strategy than you’d have if all of your funds went directly to one five-year certificate.

Mini ladders — maximum flexibility

The difference between a mini ladder and a traditional ladder lies in the time frames. Instead of opening certificates with maturity dates that are one year apart, a mini ladder would have you open certificates with maturity dates that are just a few months apart.

In most cases, this means your money won’t earn the highest yields, but you’ll have a lot more access to your cash, and the yields may still be higher than what you would get with most savings accounts.

If flexibility and access to cash are your priorities, a mini ladder may be the way to go.

The barbell ladder — the best of both worlds

A barbell ladder divides funds between a long-term certificate and a short-term certificate or a mini ladder. Depositing funds among the two ends of the certificate term spectrum with nothing in the middle gives this ladder its name.

For example, take that $5,000 you were going to put in a traditional ladder. With a barbell ladder, you’ll put $2,500 in a five-year certificate. Next, you could put the remaining $2,500 in a single short-term certificate, say one with a six-month term, or you could create a mini ladder by placing $625 in 3-month, six-month, nine-month, and 12-month certificates.

If you have a single short-term certificate, reinvest in another short-term certificate on maturity or, if you chose the mini ladder, continue with new 12-month certificates.

With the barbell ladder, half of your money will be in a long-term account, hopefully earning the best rate, while the other half will be in short-term accounts, giving you frequent access to that portion of your funds.

The custom ladder — your strategy for your money

Ultimately, it’s your money and your savings strategy and you can build your ladder however you’d like. If the traditional ladder is best represented by an extension ladder and a mini ladder is represented by a stepladder, your ladder may be best represented by a funhouse ladder — any ladder that takes you upward works.

Start by thinking about how you answered the questions above. Consider your future goals, timelines and why you’re saving. Consider the current market yields. Maybe it doesn’t make sense to set equidistant maturity dates. Maybe that wonky seven-month or 13-month term yield is too good to pass up. Maybe short-term certificates are having a moment and offering higher returns than the longer term certificates and you’re hoping to use the money in the near future anyway.

Just remember that certificates and certificate ladders are savings strategies. They’re not going to make you rich, and they shouldn’t be stressful. If you’re uncomfortable locking up your money for any length of time, they might not be right for you. But if you are confident that you can set your money aside, they can definitely add some punch to your overall savings goals.