Money is still a taboo subject among families and friends, which is why many of us don’t know what a normal amount to have (or aim for).
But fortunately, there is a simple calculation to know the exact amount of dollars you need in your checking account:
It’s a month or two of your living expenses. That’s it! So if between rent, utilities, groceries, budgeted fun stuff for your kids, and paying off debt, you’re spending $5,000 every month, then you should have $5,000 to $10,000 on your current account.
Here are some tips: It may not be wise to keep more than two months of expenses in your checking account. If you can keep it closer to a month, even better. Why? Because it will probably earn you close to zero in interest, when you could earn way more with your money elsewhere.
Here are the first things you should do with your money once you’ve saved up a month or two of expenses to cover your bills:
1. Create an emergency fund and keep it safe
If you don’t currently have an emergency fund, create one now. Having this safely stored – but readily available – can save you trouble
You should look for a place to store it safely, while earning money. Under your mattress or in a safe won’t get you anything. And a typical savings account won’t do you much better. (Ahem, 0.05% is nothing these days.)
But a debit card called Suction earns you up to 20x the average interest on money in your account (plus up to 5% cash back).
Not too bad!
Enter your email address here to get a free Aspiration Spend and Save account. After confirming your email, securely link your bank account so they can start helping you get extra money. Your money is FDIC insured and they use military grade encryption which is nerd language for “it’s totally safe”.
2. Invest 15 cents in the stock market
If you feel like you don’t have enough money to start investing after putting money into your emergency fund, you’re not alone.
How about 15 cents? Yeah, we know what you’re thinking: 15 cents? How will it do me any good?
Well, that leftover change from your morning coffee and evening errands could turn into over $1,000.
That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with tassels. The app’s rounding feature raises each of your purchases to the nearest dollar and places the alternate currency on the stock market, which helped him thoughtlessly save $1,076 in about 20 months.
“It’s a virtual coin jar,” he says. “You don’t even think about it.” He used the loose change to pay for two vacations.
What’s more, Acorns invested the money for him, allowing him to grow his savings – without studying stock prices or managing trades.
The app costs $1 per month for balances below $1 million, and you’ll get a $5 bonus when you Register.
3. Cancel your car insurance
When was the last time you compared auto insurance rates? Chances are you are paying too much with your current policy.
If more than six months have passed since your last auto insurance quote, you should look again.
And if you browse a digital marketplace called SmartFinancialyou could get rates as low as $22 per month and save over $700 per year.
It takes a minute to get quotes from multiple insurers, so you can see all the best rates side-by-side. Yes, in just one minute you could save $715 this year. That’s big cash back in your pocket.
So if you haven’t checked car insurance rates in a while, see how much you can save with a new policy.
4. Secure up to $1 million in life insurance; Pricing starts at just $16/month
Sometimes you have to spend money to make money. Getting life insurance in case something happens to you is one such case. It’s a good place to invest a few dollars each month, once your checking account and emergency funds are well placed.
For example, have you thought about how your family would manage without your income after you leave? How will they pay the bills? Send the kids to school? Now is a good time to start planning for the future by looking at a term life insurance policy.
You’re probably thinking: I don’t have the time or the money for that. But your application may take minutes — and you could leave your family up to $1 million with a company called Give.
Pricing starts at just $16 per month. The peace of mind knowing your family is being taken care of is priceless.
If you’re under 54 and want to get a quick life insurance quote without a medical or even getting off the couch, get a free quote from Bestow.