These are the types of family bank accounts I recommend.
For ultimate financial peace, you will need a few more accounts other than a checking and emergency savings account.
Consider this your primer for basic accounts!
Long Term Savings
I talked about an emergency savings account yesterday.
A long-term savings account is for precisely that. Long-term savings.
This is where you put money just to hold.
You could also use this to save for big projects, like saving for a home or opening a business.
Emergency Savings Accounts
I talked about the importance of emergency savings accounts here. These accounts are exactly what they sound like: cash set aside for emergencies.
Your job may have a retirement account set up for you, like a 401K.
You can also open your account and start saving on your own.
The good news about retirement investing is also overwhelming: TONS of plans and products to choose from.
This means you can find the perfect plan for you, but it may take quite a bit of work.
Every plan at each institution will be different, with different fees and perks. I recommend talking to a representative at each institution so you can ask about fees and restrictions like minimal balances and maximum contributions.
Educational Savings Accounts
We all want success for our kids, and that means they need education and skills. I write here about how that’s not necessarily college.
Either way, putting back money to help our kids get that knowledge and skills is ideal.
I have already written about 2 popular educational savings accounts.
529 Plans: Types of Family Bank Accounts
These are incredibly flexible but come with slightly higher fees.
Less popular and less flexible, click here for all you need to know.
Health Savings Account
Some insurance plans, especially those provided by employers, come with a health savings account. You must have what is considered a High Deductible Health Plan (HDHP).
These accounts can be used for medical needs that are not insurance premiums. So you can use it to help buy medicine or pay for procedures.
Some of these accounts can be used for retirement help, too.
Debt is a four-letter word. I really want to have no debt. It’s a big dream of mine.
But, revolving debt is significant when factoring in your credit score.
So here is the thing, you really need revolving debt to build wealth.
What is revolving debt? It’s debt that replenishes when you pay the balance.
Practically, this is a credit card.
The critical aspect is to never use more than ⅓ of your credit line. This is called your utilization rate. Utilization rates can make or break your credit.
We got one with a meager limit, so we can always pay it off quickly.
Types of Family Bank Accounts: Investment Accounts
In my Facebook group, I talk about passive income. Basically, when you don’t have to do much to earn money.
Investment accounts are the most common type of passive income.
Investing is a whole world. But luckily, there are a few ways for novices and those short on income to get a taste.
I recommend micro-investing apps. These are apps that link to your bank account, allowing you to either invest small quantities like $5 at a time or even round up the change from your purchases. So if you spend $1.96 on coffee, the app takes $0.04 and puts it in your account.
And don’t be fooled by the movies. Good investing is rarely a get-rich-quick scheme. We are not the Wolf of Wall Street.
Please leave a comment below if you want to hear more about basic accounts and their pros/cons.