For ultimate financial peace, you are going to need a few more accounts other than a checking and emergency savings account.
Consider this your primer for basic accounts!
Long Term Savings
I talked about an emergency savings account yesterday.
A long term savings account is for exactly that. Long term savings.
This is where you put money just to hold.
You could use this to save for big projects, too, like saving for a home or to open a business.
Your job may have a retirement account set up for you, like a 401K.
You can also open your account and start saving on your own.
The good news about retirement investing is also bad news: There are TONS of plans and products to choose from.
This means you can find the perfect plan for you, but it may take quite a bit of work.
Every plan at each institution will be different, with different fees and perks. I recommend talking to a representative at each different institution so you can ask about fees and restrictions like minimal balances and maximum contributions.
You can learn more here.
Educational Savings Accounts
We all want success for our kids, and that means they need education and skills. I write here about how that’s not necessarily college.
Either way, putting back money to help our kids get that knowledge and skills is ideal.
I have already written about 2 popular educational savings accounts.
These are incredibly flexible but come with slightly higher fees.
Get the lowdown from me here.
Less popular and less flexible, click here for all you need to know.
Health Savings Account
Some insurance plans, especially those provided by employers, come with a health savings account. You must have what is considered a High Deductible Health Plan (HDHP).
These accounts can be used for medical needs that are not insurance premiums. So you can use it to help buy medicine or pay for procedures.
Some of these accounts can be used for retirement help, too.
Debt is a four letter word. I really want to have no debt. It’s a big dream of mine.
But, revolving debt is really important when factoring your credit score.
So here is the thing, you really need revolving debt to build wealth.
What is revolving debt? It’s debt that replenishes when you pay the balance.
Practically, this is a credit card.
The important aspect is to never use more than ⅓ of your credit line. This is called your utilization rate. Utilization rates can make or break your credit.
We got one with a very low limit so we can always pay it off easily.
In my Facebook group, I talk about passive income. Basically, when you don’t have to do much to earn money.
Investment accounts are the most common type of passive income.
Investing is a whole world. But luckily, there are a few ways for novices and those short on income to get a taste.
I recommend micro investing apps. These are apps that link to your bank account, allowing you to either invest small quantities like $5 at a time or even round up the change from your purchases. So if you spend $1.96 on coffee, the app takes $0.04 and puts it in your account.
And don’t be fooled by the movies, good investing is rarely a get rich quick scheme. We are not the Wolf of Wall Street.
Please leave a comment below if you would like to hear more about basic accounts and their pros/cons. And join my Facebook group!
Hi! I am Ali, a homeschool mom who is passionate about science, managing my money and time well. Unfortunately, with an army of tiny faces, I am always still kind of a mess.
I was tired of not having a judgement free place to talk about money troubles with other moms. So I created one!
Click on the picture above to join my Facebook Group, Money Savvy Mommas.