BaB

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    Table of Contents

  1. Budget & reduce monthly expenses; set realistic goals
  2. Build an emergency fund
  3. Employer-sponsored matching funds
  4. Focus on paying high/moderate debts off
  5. Save for retirement in an IRA & other higher education expenses
  6. Max out retirement savings where possible
  7. Save for other goals & advanced methods
  8. Glossary
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IRA & Future Purchases

You should have no debt at this point. This page will cover the basics of IRAs (individual retirement accounts) and near-future purchases.

    Prerequisites

  • Optimized budget
  • 1 month emergency fund
  • Bills paid in full
  • Employer-matched retirement account
  • Moderate-interest or higher debt free

  1. Individual Retirement Accounts

    The two IRAs that will be discussed are: the traditional IRA and the Roth IRA. These IRA accounts are similar to the 401k accounts that were discussed in earlier chapters. The main difference is that IRA will not have a match for your contributions, but they will have similar tax advantages. Choose the one that suits you and open an account with a brokerage firm with low trading fees like Fidelity or Vanguard. Remember to invest in low cost index funds or stocks of your choice.

  2. Near-Future Purchases

    Are you expecting any large, required purchases or personal investments in the near future? This includes: college tuition, professional certificates, a car to get to work, etc. If yes, save the amount needed within the same high-yield savings account you created in the previous chapter or with a checking account. If not, you can continue on to the next chapter.

Start thinking about each account as "buckets" for your expenses. Whenever there is a new expense you should automatically think of creating a new a bucket. It's important to note that you can have multiple "buckets" in the same account. The important thing is to be able to separate the total inside the account and label it accordingly. Ally has a feature on their app to separate your money into "buckets" within the same account, but not all banks will, so you may have to keep track of the math yourself.