Personal Finance Advice

When you take a look at your personal finances you might wonder if you’re doing everything you should in order to keep yourself afloat.  One of the tricks of remaining financially healthy is to put your money in places where it will do the most good.  Every account you own should have a specific purpose, and every account should give you the best return on your money as possible.

Do you have these accounts?

1.  A checking account.  A checking account is the account you should use to pay your bills and make purchases from, using a debit card or checks.  You don’t want to pad up your checking account too much because most checking accounts don’t offer very attractive interest rates.  The majority of checking accounts don’t offer any interest at all. 

Money should flow in and out of your checking account as you pay bills and transfer money to savings.

2.  An emergency fund savings account.  This money should be separate from any other savings account you have because it is designed to act as an emergency fund in case you have a financial setback like getting laid off from work or needing to make a major purchase.  Most experts suggest 3-6 months worth of expenses.  Make sure your emergency fund is in an interest-bearing account and that it is accessible.

Keep this savings account separate from other savings accounts so you aren’t tempted to dip into this money for an impulse buy. 

3.  A regular savings account.  You should have another savings account that you can use for other forms of savings, such as saving up for a vacation or down payment on a house.  This account should also feature as high an interest rate as possible.  It’s also a good idea to have savings accounts for your children.  Most banks and credit unions have accounts designed for kids featuring no minimum balance and deposit incentives like stickers and toys.

Make sure the savings account you choose does not come riddled with fees.

4.  A retirement account.  There are many different ways to save for retirement, but the very most important thing is to make sure you actually have an account.  You might choose an IRA (Traditional or Roth), you might choose to save for retirement using a 401k through your place of employment, or you might go a different route entirely.  Just make sure your retirement accounts are actually designated as retirement funds in order to avoid tax problems.

Don’t even think about pulling money out of these accounts until you reach the age of retirement.

For a fully balanced personal financial standing you should also have an investment account, but not everyone cares to delve into the world of investing.  It’s completely possible to be financially healthy without having a single dollar invested in the Stock Market.

There are other accounts you can have, been when you’re looking to get right down to the basics of what you need to be financially healthy then these four accounts - a checking account, an emergency fund, a savings account, and a retirement account - are all important.  Remember that merely having these accounts is not indicative of a healthy financial standing. 

In other words, you actually have to have money in these accounts before you can be on the right track.