1. Emergency funds – High yield savings account with rates from 2.5% to 4.5% (or more depending on your balance!) Use a high yield to keep your “uh-oh” money in. This will be the first place you look if you lost your job, if you need a down payment to replace your car; it’ll also be the first place you’ll start to fill back up when you do need to dip into it.
I think we all know by know 6 months (take home) salary should be in here, but keep in mind you might also be paying a higher premium for your health insurance during the loss of a job*, so a little over is good to.
Own a house? The experts say you should be putting away 3% of the cost of the house every year for repairs.
|Name||APY* in 05/2023||Minimum Balance|
|SoFi Checking and Savings||4.20%||$0.00|
|Upgrade Premier Savings||4.81%||$1,000|
|CIT Bank Platinum Savings||4.85%||$5,000|
- As you can see, when you being to grow your nest egg, you can change accounts if you believe you can keep a higher minimum.
2. Long term savings –
a. With a kid:
- Look into your state’s benefits (and others – we went out of state for ours) for a 529 educational finance fund.
- Because the 529 funds education expenses, consider opening an investment account in their name – this way if they want to go on a road trip gap year, they can use these funds – or – if they need something right out of high school that the 529 won’t cover.
- And then when they are old enough consider a custodial IRA – **read about my side hustle that’s been earning my kid money since she was born!!**
b. Without (or in addition to):
- Fill your own 401k or 457b – especially if you have an employer match!
- Open an IRA on the side and contribute as much as you can up to the max every year.
- Invest in dividend stocks – this will pay you money in the long run!