I love personal finance because it is such a taboo subject. Everyone knows they should be spending more intelligently and saving for retirement, but hates confronting these facts and taking control. I want to remove the fear and help others become financially secure, so they can focus on living life.
Today I want to present a brief overview of the simplest, smartest personal finance set-up. Sort of a minimalist’s guide to financial accounts. Here I’ll condense months of research to give you the best checking, savings and investing accounts for automated, simple, secure finances.
Remember, this is just a brief overview, if this post becomes popular enough, I’ll take the time to go more in-depth into each account.
1) High-Yield Checking Account
The foundation of all your financial accounts should be a high-yield checking account. Interest rates are pretty low right now, but I suggest checking out your local credit union. Some of the credit unions around here are still offering 3% on balances up to $25,000. Pretty good for the current state of our economy.
There will be some conditions for getting the high-yield rate, but I’m sure you are already doing most of them. Our credit union requires 10 debit card purchases a month, electronic statements, and one electronic transfer (like from a paycheck) per month. Set up your paycheck as a direct deposit and do away with paper checks.
2) High-Yield Savings Account
Where do you keep your savings? Under your mattress? Get over your conspiracy theories and put it in a high-yield savings account backed by the FDIC. Just like high-yield checking accounts, the rates are low right now, but as the economy improves, so will interest rates.
Online savings accounts, such as ING’s, Ally’s and Everbank’s are all the rage right now. Put your 3-6 month emergency fund in your savings account and set up monthly transfers from your checking account.
3) Retirement Accounts
Are you saving for retirement? If not, plan on flipping burgers into your 80’s. Everyone should have a 401(k) or equivalent with their employer and an Individual Retirement Account (IRA).
This is a broad generalization, but I suggest saving about 15% of your gross income for retirement. Make monthly contributions on the 401(k) up to your employer’s match, then max out the IRA with monthly contributions, then, if there’s any money left over, put the rest back into the 401(k). For more information on investing for retirement, check out my free Minimalist Guide to Investing.
Hungry for More?
This post has only been the briefest of introductions to setting up your financial accounts to function simply and automatically. If you would like me to go into more detail about each step, let me know in the comments or by twitter, email or my contact form.
Tags: high-yield checking, high-yield savings, Roth IRA
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I'm Damien Olenslager. I recently graduated debt-free from college and now work in the tax industry.
Here I cover topics such as business, personal finance and wellness from a minimalist perspective.
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