Financial Advice for Beginners
Financial advice is good to have no matter where you are in life. It is especially helpful if you are a beginner. There are several steps you need to take in order to create a financially secure situation. Finding good resources and using practical advice is the easiest way to start building wealth.
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Setting Up a Checking and Savings Account
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Choose a banking institution you feel comfortable with. The bank you choose should be well established and offer a $100,000 FDA back-up. You will need a job or lump sum of money to open a checking or savings account with the bank. You can avoid paying monthly fee's by keeping the required amount of money in each account. Some banks offer free checking or free savings. Comparison shop before settling on a bank.
Regularly deposit an amount of your paycheck into your savings account. This will grow your savings and give you more opportunities as your money grows. This savings will grow and become an emergency fund. Emergency funds provide immediate relief for when something goes wrong. You will have cash on hand if your car breaks down, or if you have a large unexpected medical bill. You can also build enough savings to transfer some into another savings account that can be reserved for a vacation or Christmas fund. The best thing about building a savings account is that you can build enough to start investing it. Dave Ramsey has some very practical advice when it comes to investing. (Click on the link in the Resource section of this article for his site.) He is best known for helping people get and stay out of debt.
Planning for Retirement and Education
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The common rule of thumb is to deposit 15 percent of your income into a retirement fund. Planning for retirement is important. You will no longer have income after the age of 65 or whenever it is you plan on retiring. The government does issue Social Security, but it is better to have some savings built up just in case it isn't enough or the government changes Social Security laws between now and then.
Saving up for your child's college tuition is also something you will want to think about starting. Investing a small amount each pay period will quickly build the money necessary for your child's education. Keeping the money in a savings account that earns interest will help the money grow faster. Another option is to build enough to purchase a Certificate of Deposit, or CD. There is no risk in purchasing CDs and the interest rates are often better than savings accounts.
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