When it comes to managing your finances, having the right accounts is key. But with all the options out there, you might be wondering—how many accounts do I really need? Do I need to go overboard, or can I keep it simple? Let’s dive into the types of accounts you actually need to make your financial plan work for you.
Bank Accounts You Actually Need
First things first—when you start earning money, you need a place to put it. This is where your bank accounts come in.
Checking Account
Gone are the days of receiving paper checks (thankfully!). These days, most people get paid via direct deposit, and the best place to have that paycheck sent is to a checking account. You can deposit cash into it, and there’s no limit to how many times you can withdraw each month, which makes it perfect for paying bills, doing transfers, or managing your everyday spending.
Savings Account
Next, a savings account is a must. It’s the place where you can stash your emergency fund and save for short-term goals like a vacation or a down payment on a house. Ideally, a high-yield savings account is the way to go because it lets you earn a little extra money on your savings—basically, you get paid for saving.
Investment Accounts: Growing Your Money Over Time
Alright, now let’s talk about the future. Bank accounts are great for your day-to-day, but if you want to make your money work harder for you (and cover your future retirement), investment accounts are where you should look.
Retirement Accounts
Your first priority here should be a retirement account. Why? Because these accounts come with big tax perks that help you save for the long haul. If you’re working, your employer probably offers a 401(k)—and if they do, they might even match your contributions (free money, anyone?). If you don’t have access to a 401(k), or want more control over where your money goes, you can always set up an IRA (Individual Retirement Account) on your own.
Taxable Brokerage Accounts
Now, if you’re looking for even more flexibility in your investing, a taxable brokerage account might be your best bet. These accounts don’t come with the tax advantages of retirement accounts, but they allow you to invest in a wider range of assets and don’t penalize you if you need to pull out your money before retirement. You’ve got lots of choices with these accounts, so you can pick what works best for your goals.
Should You Share Accounts with Someone Else?
If you’re married or in a committed relationship, you might be wondering if you should share some of your accounts. While your 401(k) will always be a solo account (but you can make your partner a beneficiary), you can share a checking account, savings account, or even a taxable brokerage account with your spouse or partner.
Should you? That depends on your financial goals and how you manage money together. It’s always good to discuss your options and make sure your money management styles align.
Get the Help You Need
At the end of the day, managing multiple accounts can be tricky, but it’s all about balance. If you’re ever unsure which accounts are right for you, don’t hesitate to consult a CERTIFIED FINANCIAL PLANNER™. They can help you pick the best accounts for your needs and guide you on how to use them to reach your financial goals.