The first $50 should be used to open a checking account at a bank or credit union. Besides putting your money in a shoe box in the closet, there is no safer place for your money than a checking account insured by the Federal Deposit Insurance Corporation (FDIC). Checking accounts are insured up to $250,000; meaning if something happen to the bank the United States Government will step in and give you access to your money. So, there is no need to worry, your money is safe.
Checking accounts are designed to allow you to make withdraws of your money using checks and ATM/Debit cards. A checking account is at the center of all investment activity. Your checking account should be linked to all savings, brokerage and dividend reinvestment plan accounts. Having these accounts linked to your checking account will make deposits and withdraws from all your accounts easier.
Opening the Account
The two most convenient options for opening a checking account are your local banks and credit unions. A credit union is a financial institution that pools the money of the members to offer bank services to that group. To join a credit union you usually have to belong to a group that the credit union is affiliated with i.e. Police Departments or Teachers. Most institutions will open a checking account with $50 or less. When opening this account, two forms of ID, with one being state issued, will be required i.e. Passport or Driver’s License. Local Banks are usually a good choice for this account, because of their many account options. However, a credit union will usually have fewer fees. With any checking account, make sure the account fees are kept to a minimum. Preferably, look for an account with no fees and as many convenient locations as possible. Try to stay away from internet banks as your primary checking, mainly because of the convenience of walking in to a location to take care of any issue that make a risen from a check or transaction.
Most institutions offer accounts with no fees. Still, others have fees such as Overdraft, Monthly services, and ATM fees. Looking a financial institution that offers a checking account where these fees are kept to minimum is ideal.
Generally, there is no interest paid on these types of accounts. They are primarily used as holding accounts to either pay bills or transfer money to investment accounts. However, keeping a small amount of money available is always a good idea.
Besides a checking account a saving account is the next essential account in any wealth building plan. Savings accounts are also insured by the FDIC. With $50 you can open an account at any number of institutions either local banks, credit unions or internet banks online. This account could be used for a number of different goals; emergency savings, savings for your child’s college fund or long term retirement savings.
Let’s focus on an emergency fund; the ideal amount should be at the extreme very least two months of living expenses saved. For instance if your main expenses i.e. rent, car, and student loan comes to $1,500 you should have at least $3,000 saved. How do you accomplish this? $50 dollars saved every week at 2% interest in one year is $2,422, in a little over a year you will have meet your goal. The key is to get started on an emergency fund or the just in case life happens fund. Look for an account that has a high interest rate and pays the interest monthly, your money will grow faster. The online choices for this account are the following:
ING Direct – No minimum to open, and No fees
Ally Bank – No minimum to open, and No fees
American Express Bank – The credit card company has a great saving account.
Your Local bank or Credit union will also have attractive savings account options.
Finally, linking the saving account to the checking account for automatic deposits, taking set amounts of money and making deposits to your savings account will assist you in building your emergency fund.