How do I get better with money? Where to start with money? I'm lost with money.
The first step to personal finance is super important but also tragically, super boring. You need to have places to put your money in all its forms. Bear with me and hopefully we can make this a little more fun.
Checking accounts
This is going to be a no-brainer, but the good-old checking account is the basic building block of having cash stored digitally at your bank.
GG’s no-brainer: have one primary checking account where most of your earned income goes into. Start with online banks that offer these accounts with no fees and minimal requirements. Think Schwab, Ally, etc. Many people still have their money tied up at a big bank (think Chase, Wells, etc.) - it might be convenient but many of the other checking accounts provide more flexibility, better ATM withdrawal rates (cash is still a thing, sorry to break it to ya), and lower fees.
Oh, you like it spicy 🌶️?: Have three checking accounts. 1) where most of your money goes into, 2) where you put your monthly rental or mortgage payments and 3) money that goes to paying off credit cards (in full! see our guide here Credit Cards 101). Have you ever thought you had more money than you actually had after all your expenses actually get credited from your account? This makes your checking primary checking account (1) reflective of your cash on hand.
Savings accounts
I know, I know this is violently boring - I’m sorry keep with me. Savings accounts should only be used to park your emergency fund. Emergency funds, ideally, should be about 3-6 months of living expenses in cash (but also living expenses being mostly your fixed expenses and how you could live in the event of an emergency, i.e. hate to say it but all that DoorDash isn’t necessary babes).
GG's no-brainer: open a High Yield Savings Account (HYSA) at an online bank that offers more than 2% interest, there’s options at Marcus, Ally, Amex, etc.
Open a Marcus HYSA here and get one additional percent APY: here.
Budgeting
The b-word, dun dun dun. Again, yes, it’s boring but it can help you have an understanding of where your money is actually going each month, and each year. You don’t need to be an accountant to make it easy, there’s many online tools out there like You Need A Budget (YNAB) or others.
Oh, you like it spicy 🌶️?: while not completely practical for everybody, you can ‘automatically’ budget using general rules of thumb. A common rule of thumb is 50/30/20, 50% towards needs, 30% towards wants, and 20% towards savings. If you have regular paychecks you can essentially auto deposit 20% of your money across retirement savings and non-retirement savings, 50% to fixed expenses and other necessities, and then the remainder goes into your checking account for whatever you choose! It might be slightly scare to split up your money like that and not see one larger amount, but you’ll get used to the amount that shows up in your discretionary spending bucket.
Disclaimer: Not Financial or Legal Advice
The content provided on this blog is intended for general informational and entertainment purposes only. It is not intended to be, and should not be construed as, financial or legal advice. The information presented on this blog may not be current, complete, or accurate.