Hi, I'm Andrew Jacobs. Whether you're buying, selling, or renting a home in NJ or PA, you've come to the right place. This business has proudly been in my family for 30 years. Let's reach your goals together. Call or text me personally anytime at (267)-714-2900 or send me an email at
Disclaimer:I am not a financial or investment advisor, and the information on this site is for informational and entertainment purposes only and does not constitute financial advice.
“What matters is that you master money and it doesn’t master you. Then you are free to live life on your own terms.”
– Tony Robbins
MONEY STEP #1 – OPEN AN ONLINE BANK ACCOUNT
If you choose to ignore all of the suggestions that follow, please, at the bare minimum, make this one move. Open an internet bank savings account and never look back. Yes, an internet bank. Meaning, they don’t have any physical locations. Meaning, they don’t have the overhead costs that most banks do. Result: Higher interest rates!
For example, an Ally Bank (ally.com) savings account currently pays 1.00% interest.
What does this actually mean for you? Let’s assume you put $20,000 in a savings account and left it there:
Bank of America Savings Account
Starting Value: $20,000
Interest Rate (New Jersey) – 0.01% per year.
Value after 20 years: $20,040
Ally Bank Savings Account
Starting Value: $20,000
Interest Rate – 1.00% per year.
Value after 20 years: $24,403
Let me be clear. I do still have a traditional bank account for my day to day transactions. Money coming in and going out frequently. But any extra money that you can afford to put away for 1-3 years needs to be parked, earning real interest. And knowing about the power of compound interest and the negative effects of inflation, 1.00% interest is invaluable.
Questions about safety? No need to worry. Internet banks have FDIC insurance, just like your physical bank. That means your money (up to $250k) is backed by the full faith and credit of the US Government. Note: Any amount above $250k is not covered. But as you’ll see in later posts, you should never have that much money parked in a bank account anyway.
So how much money should I keep here?
Two things to consider:
1. Emergency Fund
This means keeping a certain amount of money “liquid,” (or completely safe and available at any time), in case of an emergency or job loss. Calculate how much money you would need to keep on hand for roughly 8-12 months of expenses.
2. Major Purchase
If you are saving for a major purchase within the next 3 years, (new car, down payment, etc.), that money should also be safely parked, earning 1.00% interest.
Once you have established your emergency fund, paid off any outstanding debt, and put extra money away for “1-3 years” goals, then you can comfortably move on to the next step!
“It’s impossible to map out a route to your destination if you don’t know where you’re starting from.”