So we've talked a lot about saving money and now I'm going to give you a little insight on how I organize my money! I was very fortunate and my parents started a bank account for me when I was a kid. When I started babysitting at age 13, the money I was saving went straight into that bank account. I ended up using that money to move to NYC after college (less than a year at my first real job). When I was able, I replenished some of the money in that Savings Account but for the most part, whatever is in that bank account is something I don't touch. I don't add anything to it, or take anything out. It's just gaining interest and it's my safety net.
These are the accounts that I actively use:
I have one bank account that has a "Checking" account and a "Savings" account. I've got a Debit Card connected to my Checking account and I have a Credit Card connected to this bank account. For the most part, I only use my credit card because I get percentages back on all of my purchases. But I NEVER spend money on either card unless I have that money in my Checking Account. I log into my bank website at least twice a week and transfer money from my Checking Account to pay off my Credit Card bill. My Savings Account is what I call my "Travel Fund". This is where I set aside the money that I'll need for upcoming trips. Because I don't gain interest on this savings account, I don't keep more in it than I feel necessary.
My second bank account is with a bank that invests my money and I gain interest on it. Bi-weekly, a portion of my paycheck goes into this bank account. Some weeks, it's a larger sum than others but I ALWAYS put money into this account. I don't touch the money in this account, it's for my future but I'm able to withdraw if I ever needed to. This is strictly an account to put savings into that will gain interest.
Last, I have a 401k with my employer. Same as my Investment Savings Account, a certain portion of each paycheck goes into this account. For this account, I chose an amount rather than a percentage so each paycheck, the same amount of money goes straight into my 401k. This is a great move because I never see that money, it's automatically put into savings. I know when people see the money in their spending account, they have a harder time actually putting it into their savings so when money can be sent directly to savings, it's always helpful. if you have the opportunity to set up a 401k with your employer, it's a great move. Most employers will match a certain percentage of what you put into it. Start this as early as you can so you can build up for your future retirement.
How do you separate your accounts?
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