We are just getting back on our feet (for the second time) and as such have decided to look into investing and stocks and bonds. While stocks and bond are a bit too fast paced for us at the moment we decided to stick to bank investing/ saving. Now, while your situation may be different, I would advise as always to go with what you can handle! Include your savings in your budget and treat your savings accounts as you would your bills. Paid bi-weekly or monthly based on what you have budgeted and how your money stretches.
Do your research, ask questions and take it easy on yourselves. Most importantly, discuss together and agree together. This post serves to give you a little break down on how we look at money and how we take advantage right now.
Floating money: Typically comes in the form of an interest savings account or a money back savings account. The interest will be low, but it is money that you can access without penalty, whenever you have an emergency or need cash now! I recommend that you both get one and with this account you add a little every month. Treat it as an account that you top-up every now and then. Ideally, if you find that money is left in your account from when you last got paid, and you are about to get paid again; transfer this balance to this account. Don’t even think it’s too small or not enough.
Dead money: *shivers* This would be your Chequing account or mattress money/cash in hand, basically, whatever is there will always be all that’s there. It’s stagnant and not growing. Keep your bill amounts and a little for something nice to treat yourself in this account, but don’t stifle your chances by keeping a lump sum there.
Locked in money: This would be a Tax Free Savings Account, most banks offer this option along with your regular bank services-Chequing and Savings. This could also be a Savings Bond plan with the government, where you money is redeemable when needed but not as easy to access (some wait period involved). The interests that I’ve seen aren’t bad but you will have to compare the terms. Ideally your money is usually locked in for a period in time; you cannot make withdrawals as easily. A TSFA will have a limit to how much you can save within a year and finally, your contributions to this type of account is based on how much you add for the whole year and not your balance at the end of the year. Ill provide an example, if your limit is $5000, and you deposited $3000, then withdrew $1000 and decide to top-up your account to the limit, you will be charged a penalty rate, because you would have exceeded your contribution limit. That is simply because you added a total of $6000 for the year, regardless of your withdrawal. These types of accounts are perfect for you both to have because it means pooled you would have more.
Building money: What do you need to survive in this country?! CREDIT! Easiest way to build it? A credit card! However! There are 2 ways to use it that have been great for us. One, is to try not to use more than you can afford to pay off in a single month this way Interest charges will be at a minimum. Two, if you have it but don’t need it, use it in a systematic way. Once you have completed your budget, use your credit card to pay your bills for the month, then forward the money allotted for your bills to your credit card. Credit is being built and stabilized and credit history with this bank is being developed! A budding relationship for all! As a young couple, each of you should have one (1) card; manage it well until you can add more ‘borrowed money’ to your finances. When you decide to, make it a reasonable amount, imagine all cards maxed out (life happens!) and think of how well you will be able to manage paying both off. If you can’t see it being done in a short time, you probable can’t manage that extra card.