The path to financial freedom may not be easy, but it sure is rewarding and one of the steps is knowing what accounts you need to start the journey.
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#1 – EMERGENCY FUND
An emergency fund is an account for when you run into an unexpected emergency. This account should be liquid (meaning not invested and able to withdraw any money immediately). This should be in a high-yield savings account and B&B’s recommendation is to have this account be separate from your regular checking/savings account. This ensures you don’t spend your emergency fund before you need it! Our favorite is CHIME! Open a free spending account and add a direct deposit of $200 and get $100 FREE! That’s $100 added to your emergency fund! Once you have that open, they give you the option to add a savings account with .50% APY.
#2 – RETIREMENT ACCOUNT
Retirement accounts vary. Maybe you have one through work: a 401k, TSP, or IRA. It is important to max these out, these are your best friends when it comes to saving tax-free! They are the largest tax-free retirement savings accounts and in 2022 they’ve upped the amount you can contribute to 20,500 for the 410k and TSP. The IRA’s are $6,000. Even more important, once you have an account make sure you invest in something! Don’t put the money there and leave it, you will miss out on growth on your investment. In our group Budgets & Benjamins, we discuss the best ETF and Index Funds to invest in. It all depends on the investment account you choose. We at Budgets & Benjamins recommend Fidelity. You can get $100 when you open a new qualifying account and deposit $50 with the code FIDELITY100.
#3 – DEBT/FUN ACCOUNTS
This is another account that you need! Separating your accounts will benefit your financial journey and keep you from spending money you need to pay off your debt or save for fun! Again, we recommend CHIME for this. You get $100 when you open a new account and add a direct deposit of $200 and they have one of the highest APY savings accounts at .50%! Having a separate account allows you to set up debt payments automatically without any other payments coming out so less risk of overdrafts. As well, creating a separate account to save fo fun, allows you to set aside spending money and not dip into your regular accounts!
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