Must Have Financial Accounts: Our Picks for Each Type
First of All Comes Budgeting and Personal Finance Skills
In order to be successful and achieve a decent quality of life – you MUST learn to manage your money. When you are able to effectively manage your finances you are able to make smarter decisions and attain your goals. It might seem daunting to keep track of every dollar with your name on it and where it’s sitting, but it doesn’t have to be.
There are a few simple steps you can take to keep tabs on your income. This website does not offer professional financial advice, but we’ll touch on some general basic tips.
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- 1. Create a Budget – This maps out where your money is going and where you can cut back, if need be. To create a budget, simply list out all of your income sources and then all of your recurring expenses and bills. Once you have that information, you can start to see where your money is going and where you might be able to save.
- 2. Track Your Spending – This can be done in a number of ways, but the most important thing is to be consistent. One way to track your spending is to use a budgeting app, spreadsheet, or good old paper. Hiatus is a free app that helps you see where your money is going each month so you can make adjustments as needed. It can also be very helpful in gaining an understanding of your spending habits.
- 3. Save Money Regularly – Set up some sort of system for savings. This could be setting up a separate savings account that you transfer money into each month, or it could be setting aside cash each week to put towards savings. The important thing is to have a plan for how you will save so that you are more likely to actually follow through with it.
You might have to make some uncomfortable decisions, but that’s okay as long as you base your decisions on needs vs wants. By following the steps above, you can better keep track of your money and ensure that you don’t over spend. Doing so will help you stay on top of your finances and avoid stress of potential financial situations later on.
It’s 2022 – Online Banking and Everything Digital
It’s an ocean of advertising and financial terms, not to mention logins to remember. With so many options available, it can be hard to know which financial accounts are essential. And just shopping around for financial accounts is a ton of work. It doesn’t matter if you’re looking for a personal checking account with great features or a credit card that offers cash back, no one can possibly look at all the available options.
One of the best ways to get a handle on your finances is to keep things simple. You have probably already stepped into the digital age. Sending money on Venmo works for splitting lunch, but to to level up your finances you will need other types of accounts.
This guide will help you keep things simple by explaining the types of accounts and best providers, and maybe even get some cash sent your way. Don’t worry – we’re staying away from NFT’s and the Metaverse on this one.
The Types of Essential Financial Accounts for Everyone
Most Convenient Personal Checking Account
Pretty much every financial institution offers a personal checking account, and it can be hard to know which one is right for you. But if you’re looking for the most convenient account, then there are a few things you should keep in mind.
First of all, you’ll want an account that offers mobile banking. This way, you can manage your money on the go, and even deposit checks without having to visit a physical bank branch.
Another thing to look for is ATM access. Having multiple ATM locations means you won’t have to worry about finding a local bank branch in order to be able to get cash or make deposits whenever you need. Back in 2014, Bank of America had one ATM in the state of Utah. Now imagine dealing with that, you might as well switch banks.
Chime is a great option for a convenient personal checking account. By the way, you will get $100 by signing up through this link!
With a Chime checking account there are no monthly fees, no overdraft, and no minimum balance. They supply a debit card that can be used anywhere because its a Visa. You can overdraft up to $200 without penalties and the negative balance is simply deducted from your next deposits. There are 60,000+ fee-free ATMs at convenient stores like Walgreens, CVS, 7-Eleven, and Circle K.
If you set up a direct deposit to Chime then you will get paid up to 2 days early. The most compelling thing is the ease of use of their mobile app. It’s simple and easy to navigate to do what you need to do. And transferring money between Venmo or Payal to Chime, or vice versa is no problem. It’s also secure and easy enough to set up shared accounts for minors.
*Chime is not a bank. Services provided by The Bancorp Bank or Stride Bank, members FDIC.
Best Credit Card for Cash Back Benefits
There are a lot of great credit cards out there that offer cash back benefits. But which one is the best? It really depends on your spending habits and what type of cash back rewards you’re looking for.
If you’re a big spender, then you might want to consider a credit card that offers tiered cash back rewards. This means that the more you spend, the more cash back you’ll earn.
But if you don’t spend a lot of money each month, then you might be better off with a flat-rate cash back card. These cards usually offer 1% cash back on all purchases, regardless of what type of purchase it is. So look for a card that offers bonus rewards in specific categories (like gas or restaurants) that align with your spending habits. The best credit card for you is out there – it just takes a little bit of research to find it!
We recommend looking at Owner’s Reward Card by M1 Finance.
It’s a great card to maximize the benefits of your spending because you get up to 10% cash back. The cash back rewards are tiered by merchants, which you probably already buy from.
If you don’t spend much, but still need to have a credit card. A good option is the Aspiration Zero card.
You’ll get 1% cash back on every purchase so you are benefiting even though you don’t have a shopping heavy lifestyle. For example, students. They also participate in environment-friendly initiatives.
The Owner’s card is called “Owner’s” because you can reinvest your rewards into companies that you shop with. By shopping with this card you can build a portfolio for long term goals.
*M1 is not a bank. Services provided by Lincoln Savings Bank, Member FDIC.
*Aspiration is not a bank. Services provided by Coastal Community Bank, Member FDIC.
High Yield Savings Account (up to 4.5% APY)
A high yield savings account is a great way to earn interest on your savings. Many banks and credit unions offer high yield savings accounts with interest rates averaging 2 to 2.5% APY. With a high yield savings account, you can earn more interest on your money than you would with a traditional savings account.
To find the best high yield savings account for you, consider your needs and compare different accounts. Some things to look for include:
- The interest rate: Obviously, you want to find an account with a high interest rate. However, be sure to also look at the Annual Percentage Yield (APY). The APY takes into account the effect of compound interest, so it’s a better indicator of how much interest you’ll actually earn.
- Minimum balance requirements: Some high yield savings accounts require you to keep a certain minimum balance in order to earn the advertised interest rate. If are able to meet the minimum deposit, you may need to find an account with a lower interest rate that requires a lower balance requirement.
- Fees: Some high yield savings accounts have monthly fees or transaction fees. Avoid these accounts if possible, especially if you’re trying to save money.
Tellus offers a 4.5% APY savings account. How they operate is actually very interesting for a fin-tech company. They generate returns by providing single-family mortgage loans to American borrowers. The loans are always overcollateralized and the interest comes back to you as daily passive income.
In the app there are two buckets, a boost account and a reserve account. The boost account gives you a base APY of 3.00% which can be temporarily boosted. Then the Reserve account is set at an APY of 4.50% which is static but only allows up to $2,500.
You can automate your saving with recurring deposits with zero fees, and set goals, or stacks for say a new car. The interest is paid out daily and funds are always 100% liquid. It costs nothing to use and you can pull your money out at anytime.
There’s more to like – no cryptocurrency or stocks are involved. Not everyone wants to take on risk & volatility. Tellus creates passive income by leveraging real estate, while keeping you out of the market.
*Tellus is not a bank. Services are provided by the Chase Bank, Member FDIC.
Most Streamline Small Business Checking Account
Having a separate bank account for your business or LLC is super important for taxes. Your personal money and your business’ money should be kept in different places. When you’re looking for a business checking account, you want one that is going to be easy to use and that won’t cost you a lot of money in fees.
If you have a small business, then you might want to consider an account that doesn’t require a minimum balance. If you process a lot of transactions each month, then you’ll want to look for an account that has unlimited transactions.
Take a look at Novo. It is a free, online business checking account with unlimited transactions. We think it is a great option for freelancers, contractors, single-member LLCs – especially online businesses. This checking account has no monthly fees, no ACH transfer fees, and no incoming wire fees. Additionally, you can also send an unlimited number of invoices for free.
If your business does a lot of cash transactions, then you should know that Novo cannot accept cash deposits. Although you cannot order checks through Novo, you can send paper checks directly from its app. And of course you get a physical debit card.
If your LLC operates online then you need the technological innovations of a fintech more so than traditional banking products offered by say Bank of America. Software integrations is an area where Novo shines and makes it attractive for online businesses. It integrates with Quickbooks, Stripe, Square, PayPal, and others.
Above all, Novo offers fee-free banking. Any ATM fees are refunded at the end of each month, which is a nice feature to have.
*Novo is not a bank. Services provided by FDIC-insured Middlesex Federal Savings.
Modernized IRA for Retirement
Everyone knows or should know about 401(k) accounts, which are usually offered only through employers. Another type of retirement account to consider opening is an IRA. It is a long-term savings account that individuals with earned income can open for certain tax advantages. The IRA is designed for self-employed people who do not have access to a 401(k). But a person can have both types of accounts, and many people do.
Because IRAs are meant for retirement savings, there is typically an early withdrawal penalty of 10% if you take money out before age 59. If your IRA is a traditional account instead of a Roth account, you will owe income tax on an early withdrawal.
Traditional IRA – Allow you to contribute pre-tax dollars to a retirement account where investments grow tax-deferred until withdrawal during retirement. At the time of retirement, withdrawals are taxed at the owner’s current income tax rate.
Roth IRA – Allows you to pay taxes now on money going into your account, and then all future withdrawals are tax free. Usually the account must be open for at least 5 years before it is eligible for withdrawals. This is the better option if you feel tax rates will be higher in the future than they are in the present.
These are two great options to save for retirement in a digital world.
SoFi offers IRAs that are active or automated. With an account you’ll get access to a broad range of investment options with no commission fees. They even provide access to their financial planners for advice for your financial situation. Or you can choose an automated IRA, and SoFi will build a custom portfolio for you with a mix of stocks and bonds based on a risk level you set.
Alto is an “alternative IRA” because alternative your portfolio can be built from investments from assets like fine art, venture capital, startups, real estate, land, and more. On top of that they offer a Crypto IRA that allows you to buy, sell, and trade crypto using your retirement savings. They have a direct integration with Coinbase for 24/7, real-time trading, with no monthly account fees.
Best Account for Crypto Trading
This type of account is not a necessity but we will consider it prudent. Just like Netflix quickly became mainstream and Blockbuster disappeared, cryptocurrency might very well be a norm in a few short years, or at least more widely used.
If you are interested in cryptocurrencies, then you probably have a crypto wallet. Experienced investors are able to make profit by trading cryptocurrency. Just like with stocks, it is very important to research in order to decide which options meets your personal investment goals first. Be aware that trading crypto can be extremely risky. It is a volatile asset, and can lead to losing capital and incurring losses.
Disclaimer: You should consult finance professional and understand the risks of investment activities.
With Gemini you can do two things – trade cryptocurrency to build your portfolio , and with the Gemini credit card you can earn crypto rewards from your purchases. Rather than cash back, you get crypto back towards your portfolio.
The rewards range from 60+ different coins that you can select as your rewards at any time. This card offers up to 3% back on dining, 2% back on groceries, 1% back on all other purchases. Best of all, there is no annual fee and no exchange fees. Get $5 in free bitcoin by signing up through this link.
*Gemini Exchange is not a bank. Services provided by Web Bank.
Keep Your Money Simple
When possible, automate your bills to get paid so you don’t need to manually login and pay every time. Usually if you use the bank draft option there is no transaction fees, which will save you a few dollars. If you are trying to build up your credit score then using a credit card for bills might be worth the extra 2% fee.
Since money is a precious resource to most of us, then most likely you are already keeping track of your income and expenses, and where every dollar is. If you’re not, well that’s okay but you should – it will make your life easier.
Knowing how and when to use each type of account will help you make wiser financial decisions.