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Some essential life hacks and skills they do not teach in school - like selecting and managing bank accounts for one. Once you're on your own, how do you figure out which accounts are the most important to you and which can wait?
Although there are several account kinds to choose from, it is critical to understand which ones should serve as the foundation of your financial life. Here are the three fundamental accounts that everyone should have, regardless of age or starting point.
At the core of your financial life is the savings account: a retail banking product dedicated to building a nest egg towards future goals. Savings accounts exist in a variety of sizes and forms. While some credit unions require you to create a savings account in order to join, others provide them as a supplement to checking accounts.
You can't spend money straight from a savings account, as the name implies, but you may deposit money into it. In exchange for keeping your cash with them, the bank will give you a modest sum of interest. If you need to access your savings, you'll need to visit a bank office or transfer funds from your savings account to a checking account on your mobile app.
High Yield Savings Account
The term "high-yield savings account" refers to a type of savings account that pays a greater interest rate than typical bank or credit union savings accounts. Tiered incentives are common in high-yield accounts, meaning the more you save, the more interest you'll receive.
Before putting money into a high yield savings account, ask yourself these questions:
How much money am I saving?
What is my goal for this money?
When will I need this money?
The first step toward genuine financial freedom is to open a savings account. You'll eventually need an account for day-to-day expenses, such as food, rent, utilities, and vehicle loans.
The checking account is the most common type of spending account, and it gives you the greatest freedom with your money. You'll be able to spend using a debit card practically anyplace plastic is accepted, and withdraw cash from almost any ATM, in addition to writing checks to make transactions. A checking account can let you access money no matter where you need it, making it a must-have account.
You can also set aside part of your budget to contribute to an Individual Retirement Account or a Registered Retirement Savings plan or a simple Retirement Account which offers substantial tax benefits and attractive interest rates.
How much should you contribute to your Retirement Account?
When people start their retirement accounts, the first question they often ask is “How much should I save in one?” As with all things in life, it depends on your personal situation.
While many experts recommend saving 10% of your income, any amount can help you start building wealth to use in your future years.
Before opening an account, be sure to understand all the benefits and drawbacks for a start.
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