3 Bank Accounts Everyone Should Have, According to Rachel Cruze
How many bank accounts do you have? You might have one or two at most, but money expert Rachel Cruze recommended everyone keeps their money in three accounts.
In an episode of The Rachel Cruze Show, Cruze broke down the three bank accounts everyone needs for their money, whether they’re spending or saving these funds. If you’re not already utilizing these three accounts, consider opening them up the next time you’re at the bank.
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Checking Account
Most people have a traditional checking account, which acts as a primary hub for depositing your paycheck, day-to-day spending and transactions and paying bills.
To be clear, Cruze said a checking account is a separate entity from an emergency fund and savings account. The amount of money kept in this account should be used for regular spending purposes. Avoid co-mingling additional funds, like savings, to ensure you don’t accidentally spend this money.
Emergency Fund
Your emergency fund is the safety net between you and life’s unforeseen moments. These funds should be kept in an account which is separate from your checking account. Cruze recommended keeping an emergency fund in a high-yield savings account with a debit card attached to it. This ensures you can access this money quickly in the event of an emergency.
How much money should be in your emergency fund? Start with $1,000 as your starter amount. Once you’ve paid off any outstanding debt, Cruze said to bump this amount up to cover three to six months’ worth of expenses.
High-Yield Savings Account
The third account you need is savings and ideally, this money should be kept in a high-yield account. Compared to a traditional savings account, you’ll be able to get much higher returns in a high-yield account with a 4% or greater interest rate.
How long should you be setting money aside into savings? Cruze said this account is great if you’re planning to make a major purchase, like a car or a down payment on a home or use this money in another substantial way within the next five years. Any longer is when you need to start planning to invest your money.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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