Hi! I just got married a couple weeks ago, and now we have all this wedding money. We wanted to set up two joint accounts, one for spending and one for saving. Originally, we were going to do a joint checking account and a joint savings account. After talking to several friends and relatives, they advised me that there are better options to save money than savings accounts. They told me I should look at options like CD and Roth IRA accounts. The "savings account" would be money for kids to go to college. If we don't have kids, we can use it for a ferrari, xbox 30240, iPad 84, or something later on in life. Any recommendations? So far, everyone's been raving about Roth IRA accounts. If this is the best way to stash and grow money, where is the best place to open one? I'm in Houston if that matters Thanks in advance!
We have multiple accounts. My wife and I each have our joint checking account. We do this so we can each have some money to spend without oversight from the other. You should still have a savings account for emergencies, but it is painful to watch how slowly that money grows now. You can find better rates online than at local banks. Credit unions also pay better. When you have that squared away, then you can look at a Roth IRA or taxable investment fund. Fidelity, Vanguard, Schwab, etc. can all help. For kids you can set up a 529 plan.
Probably a good idea to have all. Roth IRAs are usually a great choice, assuming you are eligible to contribute, which you most likely are. Contributions are tax-free since you already paid the tax when earned, and can be withdrawn at any time penalty free. Once you are 59.5, you can withdraw earnings tax and penalty free. Earnings can even be withdrawn beforehand for a first-time homebuyer or for educational expenses. The earnings will be taxed, but so would a savings account. Distributions are withdrawn in the order of Contributions, Conversions, and lastly earnings, which allows for the most benefit to the taxpayer. Once you actually have kids, you should look into a 529 plan for college savings. These plans are similar to Roths, but designed for education, rather than retirement. Only downside is if none of your kids go to college, and you have to take a penalty for withdrawing the money for non-educational purposes (You can roll it over to another family member, such as your grandchildren penalty free). Most states offer an incentive to use their 529 plan. I'm not sure if Texas does, since they have no income tax, but Georgia lets you deduct up to $2,000 on your state return per child.
Thanks for the advice. We planned on holding on to our own individual checking accounts for our own expenditures. We would open a joint checking account for "together" expenses like the mortgage, utilities, etc. We originally planned to do the savings account, and we still might but just not at with a bank, but we're starting not to see the point in the savings account if we invest in a Roth IRA. Maybe it's because I'm haven't researched a savings account as much. Is a savings account more lenient when withdrawing from it in case of a rainy day? We will definitely look into a 529 plan when/if we have kids. Our plan is to have our paychecks direct deposited to our own individual accounts, like it's always been. Then commit a certain percent to the joint account and a certain percent to the savings and/or Roth account(s). We'll probably end up with 10-15% of our paychecks in our individual accounts. we haven't crunched the numbers yet, but we need to soon. These wedding checks need to be deposited asap! haha This is a financial plan very similar to what we were thinking, just with more options. Thanks for dropping knowledge
Yes. You need it for emergencies like car problems, ER visits, loss of job, etc. The rule I have always heard is to have 6 months to 1 year of expenses in a savings account. Unfortunately, with current interest rates that is not practical. You might be able to get a line of credit from a bank/credit union and use it for bigger emergencies, but you need some easily accessed emergency money in a savings account.
If there are no secrets between both of you, and trust isn't an issue, then it doesn't matter what you both have. Even if you do have trust issues or don't, have a TOGETHER/JOINT one for expenses involved in anything you do TOGETHER/JOINT, like a home, or a car you will BOTH drive, etc. Ultimately, if you're now together, why continue to have separate things? UNITED you stand.
Build up your savings to account for 12 months of expenses. There's your emergency fund. Put that aside in someplace fairly liquid. After that you can do your Roth, employer's 401k, stocks, bonds, etc. If you're don't want to worry about stuff just go with Vanguard and do a mix of their funds. You can go with Vanguard for your Roth too.
Been looking around for a checking account and savings account. I thought we could just open a joint checking account with our bank, but I decided to see what was out there after the suggestions. I found out some checking accounts earn interest! Despite my dread to even look at banks right now, I saw this from Capital One: http://www.capitalone.com/checking-...1B1955C8C9DD18E8E813F_CKACTHOME_C2_03_T_CKHYC What's not to like about this? What do you guys think? For the savings account, I looked at credit unions and online bankers. Here's what I found: ING Direct https://secure.ingdirect.com/myacco...com/products/products.asp?nf=false&link=3 How does this look? All the credit unions seemed the same to me (First Community, Houston Financial, PrimeWay, Smart Financial). Any testimonials for a credit union?
I recently discovered Perkstreet checking and am thinking about switching to that. They give 1-2% cash back (in gift cards), just like the credit cards, on purchases made as "credit" using your check card. Also tons of free ATM locations. No physical locations though. You have to mail in paper checks or you can direct deposit or transfer from another bank (i'll keep an account open at BofA for that). Anyone have any experience with them? 1% at Capital One is pretty good, but that's pretty rare and I'm tired of supporting the big banks. If I spend $500 a month on my card, I'll get about $120 a year at Amazon or Target through Perkstreet ... you'd have to keep over $10,000 in your account even at that high, rare 1% return on checking to get that much in interest. If I want real returns I'm going to move most of that emergency fund into a Roth as juicystream described.
Perkstreet is good, but the best one is schwab investor checking. http://www.schwab.com/public/schwab/banking_lending/checking_account
There is website that his been posted here before that will show you the best interest rates available. Don't remember it, but know it has been posted before. I think Lil Pun was the poster.
