Hello, my dear! How are you doing? Are you feeling centered, like life, money, and everything makes sense? If you're feeling lost, never fear! You aren't alone. This blog will help you make your money work for you.
Types of Money Accounts
Knowing where to put your money is vital to investing in yourself. We’re eliminating the stressful guesswork so you know where to put your hard-earned cash. To that end, let's review some account options.
Checking accounts offer easy access to your money daily. Customers often use debit cards or personal checks to pay for things from their checking accounts. They also pay off expenses such as loans and credit cards from their accounts. These accounts often have associated fees, which can be avoided depending on spending habits and contract rules. When signing up for a checking account, shop around and find the account that works for you.
Savings is a vital account for everyone—the standard savings option works for most people. Try to make sure whatever money you put into savings is money you can afford not to use because accounts will often place fees on users who withdraw too many times monthly. Interest is how your account makes money. Your interest rate could be compounded daily, weekly, monthly, or annually. Understanding the terms and benefits of your account will help you get the most out of its use.
Money markets or high-yield savings accounts are excellent options for people with discretionary income. They usually have a higher minimum balance than a standard savings account. The benefit is they compound at higher rates than traditional savings, meaning holders can earn more money.
A Certificate of Deposit, or CD, is another savings option. CDs earn interest for a fixed period, and they must remain untouched for the entirety of their term or result in penalty fees and lost interest. A CD term is typically 1, 3, 6, or 9 years. You can also find special promotion rates sometimes, so pay attention and shop for the CD that fits your needs best.
Pay Student Loans
You did what you were supposed to. You went to university to get a "good job." Now you're saddled with more than 10,000 in debt, and hopefully, that excellent job is paying you enough to have an apartment (or, if you're fortunate, a house) and feed yourself. That doesn't solve your student loan debt, though, does it? Instead of sinking into despair, come up with a plan.
If you have an extra $100 to put toward your student loans, it will reduce your debt much quicker (make sure it's deducted from your total balance – not just your next month's payment). You can pay off a 4.5% interest of $10,000 in 5 instead of 10 years. If you have good credit and a good job, you can refinance, lowering your interest rate and making repayment even faster. Be careful if you have a federal student loan, though. Refinancing will make forgiveness and income-driven repayment programs hard or impossible to join. Setting up autopay might also reduce your interest rate. Paying biweekly, or according to your paycheck, instead of monthly can allow you to pay off quicker and trick your brain into not spending money you don't have available every check. Paying off your debt will make you feel accomplished and help your bottom line.
Building your Credit Score
A credit score is critical to everyone who wants to make a large purchase, such as a car or home someday. How do you create a credit history? You incur debt and then pay it off on time. Some ways to develop your record are by getting a student loan, a private loan, or a credit card. New debit cards like Chime also help build or repair damaged credit. It's recommended to have a credit score of at least 620 to make large purchases. The key to raising your score is paying off your card frequently and having several sources of debt, such as a student loan, mortgage, and credit card. Contrary to popular opinion, paying off your credit card in full won't affect your score.
Saving for a House Plan
Owning property means having assets that can be appreciated and passed down to future generations. There are a lot of misconceptions about home ownership, though. A popular myth is that you must put down 20% of purchase value presides. This is false. A first-time homeowner must only put down 3% for an FHA loan. Putting down a lower amount than 20% might require you to obtain mortgage insurance, which can be an extra expense. Putting down less than 20% on a private loan will often result in a higher rate. If you're considering home ownership, an excellent place to start is by figuring out how much you can afford and going from there. Homeownership also has fewer rules and restrictions than property rental. However, owning in a community with a Homeowners Association may mean additional fees and regulations are implemented to maintain property values. Decide whether the benefits outweigh the downsides of an HOA before you buy a home, or at least take a look at the contract before paying a downpayment to see if the rules are ones you feel you can adhere to. Failing to adhere to HOA rules could result in fees and even a lien placed on your home!
Remember, investing in yourself means knowing what you want, where your money is going, and where you want your life to go. Putting your money in the proper accounts will help you manage your money and grow wealth. Building your credit score will help your life so that you can make large purchases like a home and car. After building up your credit score, you can start saving for your home, research to get the best rate, and decide where you’ll live.I hope these tips help you on your journey to invest in yourself and create the life you deserve. Check out my app to help make your money work for you.