I turned 30 last month, which triggered quite a jumble of feelings in me. Denial. Nostalgia. Introspection. Oldness (is that a feeling?). And, perhaps most significantly, concern over whether I’m where I should be in life. A big part of that is wondering if I’m where I should be financially, so in the past few months I’ve taken several steps to try to get my personal finances in better shape. I figure it’s never too early or too late to work towards a better financial future.
A little bit of context: I got married two years ago, finished graduate school about a year ago, and started working for Kasasa shortly thereafter.
Step one: Really evaluate my bank account options
I’m embarrassed to admit that when I got married two years ago, I was still using the same megabank checking account I had signed up for when I was eighteen. It earned no interest and required a $1,500 monthly balance to avoid service fees. Due mostly to lack of awareness, I never took the time to evaluate other options. It hurts now to think about how much I could have saved over the course of ten years, just with a checking account that earned interest.
When my wife and I got married, we did a bit more homework and ended up opening a free “high yield” checking account and savings account with an online bank. I was happy to have a free account with interest…until working for Kasasa helped me realize how much better we could do with an account from a community bank or credit union. So we evaluated our options again, this time feeling much better informed, and are now the proud owners of a Kasasa Cash® account and a Kasasa Saver® account. Our Kasasa Cash account earns 25x what we earned on our previous checking account, and even pays 3x higher interest than our old savings account.*
Step two: Start using a personal finance management tool
I’ve always considered myself to be pretty good with money, in that I control my spending and am good about avoiding unnecessary purchases. But until recently I never had an organized budget or a way of looking at my spending and personal finances across the many various accounts my wife and I own. A few months ago I started using a personal finance management (PFM) tool, like Mint or EveryDollar, that allows me to see all of our accounts in one place. The breakdown of our spending by category can quickly illuminate the areas we need to pull back on (like eating out too often), and helps us set and stick to a budget.
The most concretely useful feature so far could be the debt payoff view. In January I was entering the final year of a 5-year car loan, and was planning on continuing my auto-payments until the loan was paid off. By playing with the debt payoff tool in my PFM tool mentioned above, I found we could save close to $100 by paying off the loan immediately, which we did. The interest on the loan was much higher than any interest we could have earned from keeping that money for a few months, so this was a financial move that made a lot of sense (and that I wish we had made earlier).
Step three: Stay informed
There’s a lot to learn and to keep up with when it comes to personal finances, so I try to do some reading every month to stay informed. I have a subscription to Kiplinger’s Personal Finance magazine, which is great for keeping up with general financial trends and advice. Their information on stocks and mutual funds is also really helpful when it comes to managing the portfolio we have in an E*TRADE account. Additionally, E*TRADE has a variety of research available, and I’ve set up multiple email alerts to get a heads-up anytime there’s significant news or a change in analyst opinion for a stock we own.
There are countless books out there on personal finance, investing, and other financial issues, but I started pretty simple. I’m not ashamed to admit I own both Personal Finance for Dummies and Personal Finance in Your 20s for Dummies.
Step four: Build an emergency fund
Regular readers of the Kasasa blog know that we’re big fans of Dave Ramsey around here. One of his seven baby steps towards financial peace is building up an emergency fund, with enough money in savings to cover 3-6 months of expenses. We’ve built up our emergency fund over the past couple of years, and it’s nice to know that we won’t immediately go into debt or have to borrow money if we do run into unforeseen expenses or a loss of income.
Step five: Start planning more for retirement
It’s hard for me to think much about retirement, knowing that it’s still 35 or so years away. But I also know the retirement decisions I make now will have a huge impact when those 35 years are up. Money invested today has a long time to grow.
I’ve been fortunate over the years to work for a couple of employers with a 401(k) match, and I’ve always taken advantage of that. But in the past my strategy was always just to contribute the smallest amount I could while still maxing out the employer contribution. After reading a recent Kiplinger article on "The Best Money Moves for Millennials" (a demographic for which I barely qualify), I upped our 401(k) contribution to 7% of each paycheck. The next step will be to work towards the 15% that Dave Ramsey recommends. It’s hard to commit to saving that much of every paycheck, but when it’s deducted automatically we don’t really miss it.
Overall, I’m happy with the changes I’ve made, but I feel like there’s still so much to learn and so much more to be done. I’d love to hear your personal finance advice or tips in the comments below.
*Kasasa account rates vary by institution. Account approval, qualifications, limits, enrollments, and other requirements apply. Enrollment in electronic services (e.g. online banking, electronic statements) may be required to meet some of the account's qualifications. Contact your chosen financial institution for additional information, details, and enrollment instructions.