Money Management 201

By | January 25, 2007

ACCOUNT SETUPS

Credit Card Account
This account is use to make purchases on credit. Use this account to build up credit and rack up points/miles/cash. Make sure you can pay off amount before charging. Preferably, this account pays rewards and has no annual fees.

Checking Account
This account serves as a front line for financial transactions. Use this account to write checks and handle transactions not accessible in savings accounts. Preferably, this account pays interest. However, it’s more important to be fee-conscious.

Short term Savings Account
This account serves as your emergency fund and should host about three to six months of income. Cash should be easily accessible. Preferably, this account has a high-yielding interest rate.

Long term Savings Account
This account serves as a dedicated place for your savings. Accessibility can be sacrificed for higher yields. Certificate of Deposits and other secured investments are options here.

Non-Retirement Brokerage Account
This account serves as a trading center for stocks, mutual funds, bonds, or other investments. It should have low commissions and no annual or maintenance fees. Discounted brokerage accounts are options here.

Retirement Brokerage Account
This account serves as an investment center for your retirement portfolio. It should have low commissions and no annual or maintenance fees. Index funds, mutual funds, and dividend stocks are options here.

Account Management
Manage all your accounts using financial software such as MS Money or Quicken. Track all incoming and outgoing financial transactions.

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