Determining what type of life insurance to purchase at age 52 calls for several factors that may otherwise not be considered at any other age. At age 52, considerations that may not otherwise be a factor start to come into play.
For example, a 52 year old may start to think about the unexpected health scenarios and whether or not their families will be cared for in the event of one.
It is never too late or early to buy a life insurance policy, however age 52 could be the sweet spot as there is still a good chance that you are mostly healthy and can capitalize on a low rate.
Regardless, it is something that should definitely happen as it is not a pleasant thought leaving your family unattended to financially.
If you’re past your 50s, you may think you can skip out on the life insurance plans. More than likely, you still have a mortgage, credit card bills, car payments, and several other debts that would be passed on to your family.
Every year we hear of families that are struggling to pay bills that were left behind by a family member because they didn’t have insurance coverage as they were getting closer to retirement. It’s easy to see why life insurance is still an important purchase life insurance at age 52.
Is Whole or Term Life Insurance Best at Age 52?
When considering life insurance, there are always multiple options to choose from. Perhaps two of the best options to make a selection from at this stage in life are either whole life coverage or cheap term life insurance coverage. Term life insurance is one of the most sought after types of insurance as it is not only inexpensive but it allows for a decent amount of flexibility in coverage. The coverage on this policy expires at the end of the term, depending on what length you have selected.
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Whole life insurance is slightly different from that of term life insurance. Make your premium payments under whole life insurance, you are insured. Additionally, the policy starts to accumulate value over time and is actually looked at as an asset. This means that you can borrow from it in certain cases, almost making it a type of investment. For anyone that doesn’t want to worry about losing coverage at the end of a term, these whole life plans are an excellent option. Because you will never lose the insurance coverage, you’re going to pay more for these types of plan.
Determining which type of insurance to use is mainly dependent on what your needs are at a 52 year old. The insurance provider is always another important decision to make. If you are not clear on what type to buy or which insurance provider to use, it is never a bad idea to seek the guidance of an experienced insurance provider.
We know that buying the perfect life insurance coverage can be difficult. Because it’s so important that you make a great choice for your life insurance needs, it’s vital that you work with an educated insurance agent.
The rates for term life insurance vary depending on how much insurance you actually need. Starting at $250,000, the rate that you will pay starts at $16.08. For $200,000 of coverage, the rate jumps up to $32.20. For $500,000, the rates will start at $55.32. The rates are for those that are considered healthy adults. This would include those who lead a healthy lifestyle, have no pre-existing illnesses, and those who do not smoke. Of course, there are various other factors that affect your insurance rates so the best bet is to get several quotes and consider all factors. Here are some quotes for $250,000 of coverage:
Sex
10 Year
20 Year
30 Year
Male
Protective – $29.40/month
SBLI – $50.90/month
Banner – $90.34/month
Female
Protective – $23.97/month
SBLI – $38.72/month
Banner – $66.94/month
The problem with these quotes is everyone is different. If you’re a smoker, you might as well disregard these quotes.This is because smoking cigarettes or using tobacco drastically increases your chances of health problems. If you want to get rates like the example above, it’s time to put down those cigarettes once and for all.
Similarly, if you’re looking for the lowest rates possible on your life insurance, it’s time to improve your health. You can do this through a diet and exercise. Both of these are going to health you improve your overall health that is going to translate into more savings on your insurance policy. Just like smoking increases your risk of health problems, diet and exercise LOWER your risk of health problems. It’s time you start using that gym membership that you’ve been paying for.
Aside from deciding which policy type and where to buy the plan, you’ll also have to calculate how much insurance coverage you need. Not having enough life insurance coverage could be as bad as not having any coverage at all. There are several different things you need to account for when deciding how much coverage to purchase. The first thing is your debt, and you’ll also need to calculate in your annual salary.
While it is a good idea to obtain insurance as fast as possible, it is never a good idea to jump into a plan without doing your due diligence. Seeking the help of a professional is as easy as filling out the form on the side of this page.
Obtaining life insurance for people over 50 takes working with an agent that is used to that market. Since the policy needs of people in their 50’s vary much more than people who are in their 20’s, 30’s, and 40’s having the flexibility of an agent really is a need. To get the best insurance rates available to you, you’ll need to compare prices with different companies. Just like you would with a TV or new vehicle.
INSIDE: Need help knowing how to budget? This step-by-step guide will help you create a budget that actually works. Includes free printable budget spreadsheet template!
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When you’re trying to pay off credit card debt or save money, you’ll hear it time and again: “You need a budget.” But if you’ve never created a budget, the mere thought may make you want to run and hide. Making a spending plan that works is not hard, however, if you have someone to help you.
If you’re ready, I can help. Below you’ll find step-by-step instructions to follow to create your budget, whether you’re a beginner or have budgeted in the past.
You can use a pen and paper with our printable form or software for online budgeting.
Improving your money management skills doesn’t just mean spending less. It also means learning about your spending habits and making changes.
A few tweaks may help you pay off your debt and reach long term goals, such as saving for retirement.
MY BUDGET JOURNEY
I know it can be terrifying to really look at how you spend your money. Trust me, I’ve been in your shoes. But I’ve learned that the things that were the most challenging in my life have led to the biggest rewards.
Declaring bankruptcy was a low point for me. But it also taught me many valuable lessons about personal finance. Most importantly, I learned why I must have a budget.
My husband and I used to have a “bare bones budget.” Except it wasn’t, really. Rather, it was a piece of paper where I’d write down who I had to pay every month, so I didn’t forget.
When we began our journey to become debt-free, we had to look at all aspects of our finances. One thing we did was sit down together to create a budget.
Seeing our expenses and income in writing for the first time still sticks with me. I remember being in tears. It was shocking to see that we had not been in better control of our money.
Creating a budget made us acknowledge where we were, and we realized that we didn’t like what we saw. It instantly provided us with a goal: We wanted to make positive changes and get out of debt. It took time, but we did achieve our goal (and that was one of the best moments of my life).
I am going to be blunt here. Creating your first budget and managing your money with it will bring significant challenges your way.
But I can guarantee that it will be worth it in the end. Just wait until you can finally control where your money goes instead of the other way around. It is liberating.
Before we begin, you can download our free budget form by clicking on the pink box below.
If you want something more high-tech, I recommend You Need A Budget (YNAB) or EveryDollar. These are apps I’ve tested and reviewed. Both work very well, so I’m confident recommending them to you.
WHAT IS A BUDGET?
A budget is a plan that lists your estimated income and expenses for a specific period of time. Most people use a monthly budget period. Budgets are helpful for everyone, no matter what your financial situation is.
Tracking your spending in the past helps you predict your future cash flow so you can start saving more.
WHAT SHOULD BE INCLUDED IN A BUDGET?
It’s important to include every dollar you earn and spend when making a budget. Tracking your income is easy, but your budget should also include spending categories. Some you need to remember to use include:
Your list may include more categories or fewer. Our budget template includes categories that will cover just about anyone.
Read more: The categories you need to include in your budget
HOW TO CREATE YOUR BUDGET
Now that you have your categories, it’s time to start filling in the numbers. Follow these instructions to prepare your budget.
Step 1: Gather Necessary Papers
Before you begin, be sure you have all the things you’ll need. These include (but are not limited to):
Bank statements, including debit card payments
Pay stubs
Credit card statements
Utility bills
Monthly bills from various stores
Personal/vehicle loan information
Step 2: Calculate Your Income
Next, look at your pay stub(s). Your budget should reflect your monthly income. If your paychecks come more frequently than once a month, some simple calculations are necessary to come up with an accurate monthly income.
Here are some formulas to help you:
If you’re paid biweekly (i.e., every other Friday), add four pay stubs and divide by two to get your average monthly income.
For monthly pay, you can use the income you see if the amount listed for each pay period is the same. Otherwise, add three or four months’ worth of income and divide by the same number of months.
If you’re paid weekly, take the total of four income periods.
When you’re paid hourly or on commission (i.e., your income fluctuates), add your last four months of salary and divide by four to reach an average. If your income varies frequently, you’ll need to adjust your budget more often than someone with a regular income. You may also want to follow our tips for creating a budget with irregular income.
Step 3: Determine Fixed Expenses
You must make certain payments, such as your mortgage or rent, insurance premiums and car payments, on a regular basis. These recurring expenses are usually a fixed amount.
If your bill varies slightly each month (for instance, if your utilities aren’t on a budget billing system), take the past three months’ worth of statements and average them to get your estimated payment.
You can use a spending form to figure out the exact amounts to include in your budget. For example, say your October gas bill is $45.79, your November bill is $52.95, and your December bill is $49.22.
Add those three numbers and divide by three to reach your average (in this case, $49.32). I recommend you look at the months when your utility bills are the highest. For instance, you may use more gas or oil in the winter, so use those months as the basis for your budget.
One of the most important rules of personal finance is to pay yourself first. Do this by adding categories for saving. You need to save for a rainy day as well as for long term goals, such as college or retirement.
You can set up automatic transfers each month from your checking account to a savings account for your emergency fund (aim to build up at least three months’ worth of living expenses). If you have a retirement plan at work, such as a 401(k), your money is automatically withdrawn from each paycheck before you get it.
Step 4: Calculate Discretionary Expenses
Your discretionary expenses include those that vary more, such as food, gasoline and clothes. Treat them the same way you treated the gas bills described in step 3. Make sure you take the average of three months’ spending to get the figures to add to your budget.
Be sure to include occasional expenses, such as car repairs and maintenance. The goal is to pay these bills with your regular income instead of running up credit card bills.
Step 5: Fill in the Numbers
Transfer the figures you’ve calculated above to the appropriate spots on the budget form or spreadsheet. Put your monthly income at the top, followed by the amounts for each expense category.
The categories listed on our form are a guide for tracking your spending. You can add categories that aren’t included or ignore the categories you don’t need.
Add all your income and all your expenses. Then subtract your expenses from your income. The result should be zero. If it’s not, then figure out the changes you need to make.
If your total is a negative number: You’re spending more than you earn. Reduce your spending until the total reaches zero.
If your total is a positive number: You haven’t spent everything you make. Either increase your debt payments or your savings.
FINE-TUNE YOUR BUDGET
After you complete your budget for the first time, you may feel discouraged. As mentioned above, it happened to us. But once we started to rework the numbers, I began to feel better. I began to feel like I could live with a budget. It was tough, but nothing in life worth having is easy!
To balance your budget, first look at your fixed expenses. One I always like to mention is cable. We found out we were paying way too much and found a way to cut the expense in half. (As much as we would like to cut the cord entirely, we’re not yet there.)
Perhaps you could do the same and sign up for a lower-cost cable plan to free up some income. There are many other ways to reduce your monthly expenses, such as reshopping your insurance or refinancing your mortgage.
Once you’ve cut back your fixed expenses, it’s time to look at your discretionary spending. Perhaps you’re eating out a bit too much, so your budget takes a hit. You may even be overspending on shoes. These are areas where you might need to scale back to balance your budget.
Making these decisions isn’t fun, but consider what is more important: paying off debt or buying a bigger television. These are choices only you can make. But if you’re willing to scale back now and pay off debt, it will be worth it when you can buy that new TV or those new shoes without guilt!
If you’ve scaled back on everything you can and your budget still doesn’t balance, make some calls to your debtors. Ask for a reduced interest rate or a lower minimum payment on your credit cards. You never know what they will accept until you make those phone calls.
My husband and I wanted to get out of debt, so we decided that we wouldn’t eat out as often. For more than two years, we ate dinner out no more than 10 to 20 times a year. We saved a lot of money, which we used to pay off debt. It was challenging, but the result was well worth the temporary sacrifice.
WHAT TO DO ONCE YOU HAVE A BUDGET
First of all – congrats! You now have a budget you can use. You should revisit and update your budget at the end of each month.
After a few months, you probably won’t need to make any changes. But if you get a raise, have an added expense or finally pay off your car, that will require a shift in your budget numbers. Remember that your budget must always end in zero!
Creating a budget isn’t easy, but once you have one set up and continue to refer to it, it will pay off. You’ll find it helps because you are now telling your money where you want it to go rather than it telling you where it is going each month. Financial control is a fantastic feeling.
Since its debut in 2013, Chime has become quite popular. This financial technology company partners with Bancorp Bank, N.A. and Stride Bank, N.A. to provide a number of FDIC-insured bank accounts. Just like most online banks, Chime offers higher annual percentage yields than brick-and-mortar banks.
Chime offers a credit builder account7, which acts like a secured credit card to help customers establish credit. However, its flagship products are the Chime® Savings Account and Chime® Checking Account8.
Chime has one of the most robust apps in the world of mobile banking. It also has a phenomenal rating in both the Apple App Store and Google Play Store.
Despite the fact that Chime comes with many benefits, it’s not right for everyone. After all, there are no physical branch locations and its customer service could be improved. Plus, you might be able to find higher APYs elsewhere.
18 Best Chime Alternatives
If you’re looking for alternatives to Chime, you’ve come to the right place. We’ve done the heavy lifting for you to create this comprehensive list of the best Chime alternatives.
1. GO2bank
GO2bank is the digital banking platform backed by Green Dot Corporation, a financial technology company known for its prepaid debit cards. GO2bank is designed to help people better manage their money through its user-friendly mobile app and competitive features.
The mobile banking app allows you to open an FDIC-insured account with no monthly maintenance fees if you have qualifying direct deposits. You also have access to a network of over 19,000 fee-free ATMs across the nation. With the ability to receive direct deposits up to four days early and a high-yield savings account that pays up to 4.50% APY on savings up to $5,000, GO2bank offers a complete banking solution.
GO2bank also provides a secured credit card that can help you build credit over time. With this card, you can establish or improve your credit score by making on-time payments and keeping your balance low. There are no annual fees, no credit checks, and no interest charges if you pay your balance in full every month.
In addition to these features, GO2bank offers various ways to deposit cash, including the option to deposit cash at participating retailers. You can also use the app to pay bills, send money to friends or family, and set up custom savings goals.
Read our full GO2bank review.
2. Current
Current is a neobank that partners with Choice Financial Group and Metropolitan Commercial Bank to offer banking services. It only offers one bank account that serves as an online checking and online savings account.
Current doesn’t charge monthly maintenance fees, monthly account fees, or overdraft fees. In addition, you can reap the benefits of automated savings pods and early direct deposit. Unlimited domestic ATM access is also free as Current is part of the Allpoint ATM network. You also get access to early direct deposits.
If you have kids, you can open a linked Teen Banking Account and help them build healthy financial habits. We can’t forget the Current Visa debit card, which lets you earn cash back on debit card purchases at more than 14,000 participating retailers.
Read our full Current review.
See also: Chime vs. Current: Which Is Better?
3. Axos Bank
Axos Bank is an online only bank that first opened in 2000. Its checking account options include the Essential checking account, Rewards checking account, and Cashback checking account. While Essential is a basic checking account with no fees or minimums, the Rewards checking account earns up to 1.00% interest if you meet certain requirements.
With the Cashback checking account, you can earn up to 1.00% cash back on qualifying debit card purchases. Rest assured there’s also a high yield savings account and money market account with a competitive APY. Like Chime, Axos also offers a highly rated mobile app.
Read our full Axos Bank review.
4. Quontic Bank
Headquartered in New York, Quontic Bank has been around since 2008. It has one brick-and-mortar branch in Astoria, New York but serves customers online in all 50 states.
Quontic’s lineup of products includes checking accounts, savings accounts, money market accounts, and certificate of deposit (CD) accounts. It also offers real estate products.
You can choose from three checking accounts: Cash Rewards Checking, High Interest Checking and Bitcoin Rewards Checking. There’s also a high-yield savings account, which pays an impressive APY.
No matter which accounts you decide on, you’ll be pleased to learn there are is no monthly service fee. Plus, you’ll benefit from an extensive ATM network and mobile app.
Check out our full review of Quontic Bank.
5. Cash App
Created by Square and based in San Francisco, Cash App is a peer-to-peer payment app. Cash App lets you send and receive money, do your banking, and open investment accounts, such as retirement accounts. The banking feature requires you to order a Cash App card and accept that FDIC coverage is not available.
Keep in mind that there is no way to build your credit or save money with Cash App. But you can use it to buy stock and Bitcoin for as little as $1. Plus, Cash App lets you prepare and file your federal and state taxes for free.
Learn more about how Cash App works.
6. Brigit
Brigit is a personal finance app that offers paycheck advances to help you out when you need fast cash. It might be a great option if you can’t wait until payday but want to avoid insufficient fund fees and overdraft fees. Brigit also allows you to keep track of your credit score and protect yourself from identity theft.
Additionally, you can use Brigit to find side gigs or borrow money with a credit builder loan. You will have to pay $9.99 per month to unlock all of these features. The good news, however, is you won’t be charged any interest or tips.
7. Dave
Launched in 2017, the Dave App can give you the chance to advance your paycheck to cover small emergencies. It also offers a spending account, which is essentially a checking account with no low balance or overdraft fees. To take advantage of the Dave app, you’ll be on the hook for a $1 monthly subscription fee as well as an optional express fee and tip.
There’s also a budget feature that tracks your income and spending so you can pay your bill. It will notify you any time you’re at risk of overdrafting. In addition, Dave can help you find a side hustle and earn extra income.
8. Revolut
When it initially launched in 2015, Revolut was a challenger bank with a travel card and cheap exchange rates. Now, it describes itself as a digital banking platform and uses Barclays and Lloyds to store your money. Just keep in mind that since it’s not a bank, it doesn’t offer any deposit protection.
Revolut’s long list of perks include surcharge-free ATMs, travel perks, and spending alerts. Plus you can earn cash back on Revolut card purchases and even open an investment account to invest in popular cryptocurrencies. If you travel abroad often and are looking for benefits you may not be able to find from most banks, Revolut should be on your radar.
Read our full Revolut review.
9. Varo
Varo is a digital bank with impressive technology as well as a lineup of checking and savings accounts with unique features like Chime. Since it prides itself on minimal fees, you won’t have to worry about monthly maintenance fees, transfer fees, or foreign transaction fees.
Furthermore, since it’s part of the Allpoint ATM network, you can enjoy free domestic ATM withdrawals at more than 55,000 ATMs. In addition to a competitive APY for its savings accounts, you can enjoy the Save Your Pay and Save Your Change features.
While Save Your Pay automatically transfers a percentage of your paycheck to your savings. Save Your Change rounds up online checking account transactions and lets you transfer money to your savings. These features are different from what you’d find with other online checking accounts.
Read our full Varo review.
10. Capital One
Capital One is one of the largest banks in the U.S. Its online checking and savings accounts come with no minimum balance fees.
Capital One’s 360 Performance Savings account offers an impressive APY on all account balances. This makes it worth considering regardless of what your savings goals entail. It lets you set savings goals and automatic savings plans so you can transfer funds from your Capital One 360 bank account.
With a Capital One bank account, you may access over 70,000 fee free ATMs. If you prefer in-person banking, you’re in luck because there are more than 300 branch locations in select states. You can also enjoy free overdraft protection and download the Capital One app to send and receive funds through Zelle.
Read our full Capital One review.
11. Discover Bank
When most people think of Discover Bank, credit cards come to mind first. But like Chime, Discover also offers checking accounts, savings accounts, money market accounts, CDs, and even personal loans.
It doesn’t impose minimum monthly balance requirements or charge any monthly fees or overdraft fees. Discover’s savings accounts and CDs are known for impressive APYs and its highly rated mobile app with a Quick View feature makes it a breeze to bank while you’re on the go.
Additionally, Discover offers more than 60,000 fee-free ATMs and you can earn 1% cash back on up to $3,000 in debit card purchases each month. If you need assistance, you can always reach out to its 24/7 U.S. customer service representatives.
12. Ally Bank
Headquartered in Utah and a division of Ally Financial, Inc. Ally is a full service online bank with an extensive product line up. Its deposit accounts, like checking accounts and savings accounts as well as CDs, come with competitive interest rates.
In addition to 24/7 customer service, Ally offers a robust mobile app you can use to check balances, transfer funds, deposit checks, pay bills, and send money via Zelle.
With Ally, there are no minimum balance requirements or fees for account maintenance, overdrafts, ACH payments, incoming wire transfers, or cashier’s checks. Aside from bank accounts, Ally also services customers with a wide range of mortgages, loans, and investing products. The main drawback is that you can’t deposit cash. Despite this, Ally is considered one of the best online banks.
Read our full Ally Bank review.
13. One Finance
One Finance is an online bank that lets you do all your banking from one bank account. With One, you can open one account that acts as a savings and interest checking account with no fees and the chances to earn a high APY. Your account will feature pockets that let you manage your money in numerous ways so you can budget and set savings goals.
You can think of a spend pocket as a checking account that doesn’t pay interest but helps you visualize the money you can spend each month. If you budget for various categories, like rent, groceries, and entertainment, it makes sense to have multiple spend pockets to keep track of your spending money. If you prefer, however, you can stick to one and have all your spending come from the same place.
14. Aspiration
Aspiration offers a Spend and Save account that offers checking and savings features. You can choose a basic account with a “pay what is fair” monthly fee, which can be $0 or an Aspiration Plus account, with a monthly fee but additional benefits like a higher APY on savings. If you pay annually, you can enjoy a lower fee.
Aspiration supports the environment through features like cash back if you spend at socially conscious businesses. You also have the chance to plant a tree every time you use your debit card. Additionally, your personal impact score tells you the environmental and social effects of your shopping habits. It also promises that your cash deposits won’t pay for the exploration or production of fossil fuels.
Read our full Aspiration review.
15. Bank5 Connect
Based in Massachusetts, BankFive has been around since 1855. With Bank5 Connect, the online division of BankFive, you can open a checking account, a savings account, or a CD with a low minimum balance requirements. Its accounts are available to everyone in the U.S., except those in Massachusetts and Rhode Island.
As a Bank5 Connect customer, you can enjoy access to thousands of surcharge free ATMs. You may get reimbursed up to $15 per statement cycle for any fees that are charged by out-of-network ATMs. There’s also a mobile app with features like mobile deposit, bill pay, money transfer, and an ATM locator.
16. MoneyLion
Founded in 2013, MoneyLion is a financial services company that works to help customers improve their finances. RoarMoney is its FDIC-insured checking account that comes with no account fees and several unique perks.
As long as you enroll in automatic monthly direct deposits, you can receive each paycheck up to two days early. Price Match will also refund you the difference if you find something you purchased at a lower price. Plus you may use RoarMoney to design a budget and track your spending. In addition to RoarMoney, MoneyLion offers Instcash in which you can get cash advances of up to $250 through the app.
17. Juno
Formerly OnJuno, Juno is an FDIC-backed online banking platform known for its high-yield checking account with zero monthly maintenance fees or minimum opening deposit. You can also earn cash back if you make crypto purchases or cash purchases at certain companies.
It’s ideal if you’re an immigrant or international professional because all you need to open an account is a passport and Social Security number. With Juno, you get free atm withdrawals at more than 85,000 Allpoint or MoneyPoint ATMs.
18. Wise
Headquartered in London, Wise is a financial technology company that prides itself on innovation. You can open a Wise personal account for free and won’t have to meet a minimum balance requirement or pay a monthly fee. Wise is unique in that you can hold 54 currencies and send international transfers to over 80 countries.
There are also international business accounts, which can be helpful if you send, spend, or withdraw money while you travel abroad for business purposes. While you can sign up for a Wise debit card, it does come with fees and may only be used in select countries.
What to Look for When Choosing a Bank
When you shop around Chime alternatives, you’ll notice there are no shortage of options. Here are some things to consider as you look for the ideal solution.
Fees
Fees can add up quickly. Ideally, you’d go with a bank that charges low fees or basically no fees. Fortunately, most online banks are known for their fee-free bank accounts.
With many of these checking accounts, you won’t be charged monthly maintenance fees, ATM fees, wire transfer fees, and early account closing fees. Just be on the lookout for hidden fees.
High Interest and Rewards
The higher the interest rate, the more money you’ll be able to save with minimal effort. Sometimes, you can even earn rewards like cash-back and travel points for making transactions on your debit cards.
Large ATM Network
If you’re an avid cash user, you don’t want to pay an arm and a leg every time you use an ATM. For this reason, it’s important to choose a bank with a fee-free ATM network or one that reimburses you when you use an out-of-network ATM.
Customer Service
You want to ensure that you can easily receive answers to your questions or address your concerns. For this reason, choose a bank or company that has positive customer service reviews.
Bottom Line
While Chime offers many perks, it’s not perfect. If you’re willing to do some research and compare your options, you can find several online banks like Chime. Before you make a decision, look at the banking services provided. Then, weigh the pros and cons. Don’t be afraid to test a Chime alternative for a few months or so to make sure it’s a good fit.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
7. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
8. A Chime Checking Account is required to be eligible for a Savings Account.
Last Friday’s question about the moral implications of spending prompted a great discussion, as well as a few personal messages. One of those e-mails was from Dave, who wrote with his own ethical dilemma. Instead of looking at the world at large, Dave wants to know how to handle a financial dilemma closer to home: with his own family. Here’s his story:
I read your site though I no longer need it. I did a lot of the things you talk about and was able to retire early because of it. The rest of my family hasn’t been as smart or lucky. My sister is doing okay, I guess, but my brother is in a lot of trouble, and my parents aren’t anywhere near ready for retirement.
My brother and his wife have two kids. They declared bankruptcy a couple of years ago and have tried to make a fresh start. Life has dealt them some bad blows, but they’re doing nothing to protect themselves either. To be honest, I feel like they just set themselves up for trouble. After declaring bankruptcy, they just returned to their former lifestyle and now they’re back in debt again.
I could help my brother but I don’t know if I should. (Plus I don’t know if I even want to, which makes me feel like a jerk.) What if I loan him $10,000 (or give him the money)? That might solve the immediate crisis, but what does it help long term?
My parents have problems too. They don’t spend a lot, I guess, but they hardly have anything saved for retirement, and they should both be retiring in a few years. I think they have maybe $20,000 total in a savings account, and maybe the same in various retirement plans. They don’t spend a lot, but still $40,000 won’t last long.
I guess I’m wondering: What’s my financial obligation to my family? I could bail them out, but I feel like that won’t solve any of the problems. Should I do it anyway? How? I don’t want my brother and his family to be living on the streets and I don’t want to see my parents eating dog food, but I find it difficult to help them when they won’t even help themselves. What are my responsibilities here?
I sympathize with Dave. I’m not as well of as he is, but I sometimes wonder what my obligation to my own family is. Like Dave, I have a brother who has really struggled with his finances over the past few years. Some of this is because bad things have happened to him, but a lot of it stems from his choices. And he just seems to keep making the same poor choices, even when I offer suggestions on how he might help himself.
Family issues like this are a perfect example of how money is more about mind than it is about math. It’s tough to make an objective, logical decision about how to help your brother or your parents. There’s just too much other baggage involved.
In my case, I’m not willing to loan my brother money. Though it sounds harsh, I don’t think he’d ever repay it. (And yes, I know that when you lend money to family and friends, it’s often best to view the loan as a gift instead. I’m not even willing to do that, though.) Plus, I don’t think my brother has actually reached a point where he’s ready to make the changes he needs to in order to take control of his finances. He’d rather spend money he doesn’t have to look like he has it than to cut back for a few years and live with less so that he can have more in the future. In other words, he’s not willing to make sacrifices today in order to have a better tomorrow. And that’s what getting rich slowly is all about.
So, I don’t actually have any constructive advice for Dave. I’m in the same boat, though on a smaller scale. Like Dave, I can’t figure out what my financial obligations are in this situation. Can you?
When your siblings get into financial trouble, what are your responsibilities? What about your parents? Have you bailed out a family member before? How did that work? Can you give tips on what went right, as well as offer suggestions on what you would not do in the future? And if you’ve never had to face a situation like this, how do you think you’d handle it? Help Dave (and me) figure out how we can steer our family in the right direction.
By Peter Anderson11 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited January 25, 2010.
Over the past week we’ve been writing quite a bit about retirement accounts, which ones are better for different situations, and talking about what the Roth IRA contribution limits are. Now I want to talk about another hot topic in retirement accounts, the 2010 Roth IRA conversion.
In case you haven’t heard all the buzz, this year marks a one time Roth IRA conversion event in which people can convert their traditional IRA’s, SEP IRA’s, Simple IRA’s, old 401k’s, old 403b’s into a tax free Roth IRA account. Because of the conversion event, waves of people are expected to take advantage this year and convert their traditional taxable investment accounts into tax free Roth IRA accounts.
Is It A Good Idea To Convert My Traditional IRA To A Roth IRA?
Before you even go down the road of converting your traditional taxable accounts, you’ll need to think about whether or not converting them is a good idea for your situation. There has been a lot of talk about it throughout the blogosphere, with some saying it’s a great idea for most to have their money grow tax free, while others aren’t as enthused because it seems like a way for the government to collect tomorrow’s tax income today, at a higher rate. As always consulting a financial professional before you make any moves is a good idea.
Among the things you need to consider:
Do I want to pay tax now or later? Depending on what your tax rate is currently vs. when you retire, your amount of tax can vary quite a bit. The problem is, it can be hard to guess what tax bracket you’ll fall into in the future, much less predict if tax rates will go up in the future.
Is my income too high to contribute or convert to a Roth IRA in the future? If you want to do a bit of tax diversification and your income is currently too high to contribute to a Roth IRA, this year may be one of your few chances to convert your traditional taxable account to a Roth.
Do I want to spread out my tax liability from converting? As part of the conversion event people who convert will be able to spread out their tax liability over 2011 and 2012.
Benefits Of The 2010 Roth IRA Converson
There are quite a few benefits of converting to a Roth IRA this year
$100,000 AGI rule removed: 2010 is big for so many because the $100,000 MAGI rule is lifted, making a conversion possible for even higher earning singles and couples. Previously only singles and married couples making less than $100,000 were able to convert.
Tax doesn’t have to be paid 2010: 2010 is the year that you’ll actually convert to the Roth IRA, but the income to be claimed on your taxes is able to be deferred until 2011 and 2012. You can claim 50% of the conversion amount as income in 2011 and the other 50% in 2012. Remember, this stipulation is only good for the 2010 tax year, and then goes away.
You can convert a 401k directly to a Roth IRA: If you have a 401k from an old employer, or another old retirement account, you can convert those this year as well.
Tax free growth of assets, and tax free withdrawals: Converting means the money will grow tax free, and won’t have minimum distribution requirements once you turn 70 1/2.
Contribution Income Limitations Still Exist For New Roth IRA Contributions
Even though high income earners can convert their existing retirement accounts in 2010, that doesn’t mean that new contributions to their converted Roth IRA are allowed. If you’re over the IRA contribution phase out limits, you won’t be able to make new contributions to your Roth IRA.
How To Convert To A Roth IRA
Converting your IRA to a Roth IRA is going to be very similar to rolling over an account from an old 401k to a rollover IRA. If you’re not changing brokers or investment houses it may be as simple as filling out a form. The key is to contact a financial professional who can give you advice for your specific situation.
Are you going to be rolling over a Traditional IRA into a Roth IRA this year? If so, do you plan on deferring the taxable income into 2011 and 2012? If not, why are you decided not to convert? Tell us your story in the comments.
According to the Motley Fool, the average American family has $7,630 in credit card debt, $11,244 in student loans, $8,163 in car loans, and $70,322 on a mortgage.
However, before you think the above amounts seem low, these figures include those who don’t have any debt. So, for example, when you only factor in those who actually have a credit card balance, the average amount shoots up to over $15,000.
All of the above shows that the average family has a lot of debt.
You’re different, though. If you’re reading this post, you are either close to paying off your debt or already have.
Paying off your debt, whether it be from credit cards, student loans, a mortgage, or something else, is an exciting time. A person works extremely hard and sacrifices many things in order to beat the “norm.”
But, what’s next?
Many don’t think about what to do after they pay off their debt. This can be a mistake and may even lead to someone falling back into debt.
As everyone probably knows, debt is easy to fall into, and that’s the last thing anyone wants after they have worked so hard to pay it all off. Here are my tips for life, after paying off your debt.
Carefully celebrate your debt-free life.
I recently heard about someone who paid off their debt and then threw a HUGE party to celebrate. This person bought drinks for everyone, had a caterer, and more.
I can only imagine how much this newly debt-free person had to pay for this kind of celebration and whether or not it put them back into debt. For some, this may be a fun way to celebrate, but it’s definitely not for everyone.
There are plenty of ways to commemorate your new, debt-free life. You don’t need to spend a ton of cash, or go back into debt to celebrate.
Here are several examples of how you can celebrate your new, debt-free life:
Throw a frugal potluck. Just as much fun as a catered party!
Have a nice family dinner at your favorite restaurant.
Pay for a fun experience with cash that you’ve saved up, such as a vacation, skydiving, a visit to a theme park, or something else.
Do a debt-free dance.
Scream “I’M DEBT-FREE!”
Think about getting rid of your credit card.
If you fell into credit card debt but still have a credit card, you may want to think about getting rid of your credit card completely.
While there are many benefits of having a credit card, there are negatives as well. For some, credit cards can easily lead to racking up more debt.
You should carefully examine your credit card behaviors and decide if having one causes you to spend more money. You may not truly need one.
The last thing you want right now is to fall back into your old spending habits and go back into debt!
Start an emergency fund.
Only 40% of families have enough in savings to cover three months of expenses, and even fewer families have the usually recommended six months worth of savings.
The percentage of people who have emergency funds while in debt is even lower. Many of those paying off debt don’t have emergency funds whatsoever, or they just have very small ones.
Well, now that you don’t have debt, you should focus on building an emergency fund.
These are just a few of the many reasons why.
An emergency fund is there to ensure you don’t fall back into debt due to unexpected expenses.
It can help you if you lose your job.
It is wise to have one if you have a high-deductible health insurance plan.
It is a good idea to have an emergency fund if you have a car. Your car may need a repair, get totaled, or some other unpredictable expense may occur.
It is necessary if you own a home. We all know, one of the lucky things homeowners often get to deal with are unexpected home repairs.
Emergency funds are always helpful to have, because they offer peace of mind if anything costly was to happen in your life. Instead of building onto your stress, you will know you can afford to pay your bills and focus on more important things.
Related: Everything You Need To Know About Emergency Funds
Keep your budget.
After you pay off your debt, you may want to get rid of your budget, as you probably have a little extra cash. However, right now is the perfect time to keep budgeting.
This wiggle room may have you tempted to spend all of this extra cash, but now is the time to be smart and think of something useful to do with it.
I recommend putting this extra cash towards a new financial goal of yours, such as one listed below.
Work towards a new financial goal.
Just because you’ve paid off your debt doesn’t mean you are done with your finances. Right now is the ideal time to start a new financial goal, because you are likely very motivated after finishing your debt payoff goal.
If you haven’t already, there are many other financial goals you may want to start working towards. These include possibly saving for:
Retirement.
An emergency fund.
Travel.
Starting a family.
Buying a home.
Buying a car.
Have you ever fallen back into debt? What happened? How much debt do you currently have?
Some of the largest banks call America home. These banks are backed by the Federal Deposit Insurance Corporation (FDIC) and offer a variety of products and services. If you prefer a big bank over regional banks or a smaller, community bank, you’ve come to the right place.
Below we’ve compiled a list of the largest banks in the U.S. Once you read through it and perform some of your own research, you should be able to choose a bank or two that meets your needs.
How to Measure Bank Size
First, let’s discuss how to measure the size of a bank. We can do so by looking at the number of customers, number of branches, and number of employees.
But perhaps the best way to measure bank size is by focusing on the total assets under management. This figure shows the actual size of a bank, regardless of how many employees, branches, or ATMs it has.
In our list of the largest banks in the U.S. below, you’ll find that we include each bank’s total assets so you can get a better idea of just how large it is.
Bank Services
We also thought it would be a great idea to briefly discuss how banks work and what they can do for you as a customer. Banks have been around since at least the 14th century. They offer a safe place for individuals and business owners to park their cash and work on various financial goals.
While every bank has their own unique lineup of services, most of them provide checking accounts, savings accounts, and loan services. Some go the extra mile with credit cards, wealth management services, and other conveniences.
Types of Banks
In addition, it’s wise to go over the types of banks at your disposal. The most common types of banks you’ll find include:
Retail banks: Retail banks serve the public and typically have branches and main offices. They provide a wide range of services, like checking and savings accounts, mortgage and loan services, auto financing, CDs, and individual retirement accounts (IRAs). Retail banks may be regional banks operating in various states.
Commercial banks: Also known as corporate banks, commercial banks gear their offerings to small business owners and larger corporate entities. In addition to the usual banking services, they may offer cash management, employer services, and commercial real estate services.
Investment banks: Investment banks are designed for corporate clients with complex needs, like mergers and acquisitions. These clients are large corporations, governments, and hedge funds.
Central banks: Central banks are not available to the public. Instead, they’re an independent institution that oversees the money supply and monetary policy in the country. The Federal Reserve Bank is the central bank in the U.S.
Banks vs. Credit Unions
While banks are quite popular, some customers use credit unions instead. While credit unions also offer banking services, like checking and savings accounts, they’re not for profit institutions that are managed by their customers or members.
Compared to banks, credit unions tend to deliver more personalized service. But they also provide fewer services and have fewer branches and ATMs. A credit union can make sense, depending on your unique goals.
20 Biggest Banks In The U.S.
Here’s an overview of the largest banks in the U.S.
1. JPMorgan Chase & Co.
Total Assets: $3.381 Trillion
Headquarters: New York City, New York
If you focus on consolidated assets, JPMorgan Chase earns the spot as the largest bank in the U.S. This investment bank is also a holding company for subsidiaries, including Chase Bank. Chase, which is J.P. Morgan’s consumer banking division, has more than 4,700 branches in the U.S. plus more than 30 branch locations abroad.
According to Chase, almost half of the households in the U.S. are Chase customers. It attracts digital savvy customers that value online banking and products with artificial intelligence (AI). In addition to consumer banking, JPMorgan Chase is a combined bank that offers commercial banking, asset and wealth management, and investment banking.
Chase offers some of the most popular cash back and travel credit cards that can earn you valuable rewards through their program, Chase Ultimate Rewards. Using these credit cards for everyday purchases can earn you travel points, cash back, and other benefits.
2. Bank of America Corp.
Total Assets: $2.440 Trillion
Headquarters: Charlotte, North Carolina
Bank of America is a multinational bank with nearly 66 million customers and small business clients across the globe. It has a few divisions, including Merrill, Bank of America Securities, and Bank of America Private Bank.
As a Bank of America customer, you can enjoy access to a wide variety of products and services as well as access to more than 4,000 branches and more than 17,000 ATMs.
Just like most big banks, Bank of America prides itself on a robust mobile app, the Zelle payment solution, and other intuitive digital tools. Its various service lines include consumer banking, corporate banking, credit cards, insurance, investment banking services, institutional banking, mortgage loans, private banking, private equity, and wealth management.
3. Citigroup
Total Assets: $1.720 Trillion
Headquarters: New York City, New York
Citigroup, which is widely known as Citi, is an investment bank and financial services firm. When Citigroup merged with Travelers Group in 1998, it became a major player in the financial space. Citibank, Citigroup’s retail banking division has more than 700 branches in the U.S. and over 1,800 branches outside the U.S.
Most of the U.S. bank branches are in Florida, California, New York, and Washington DC. Citibank manages over 138 million bank accounts and has 65,000 fee-free ATMs across the country. Over the years, it has earned high rankings for its digital money management tools, including one that shows customers a financial wellness score.
4. U.S. Bancorp
Total Assets: $582.25 Billion
Headquarters: Minneapolis, Minnesota
The parent company of U.S. Bank, Bancorp’s locations are mainly in the Midwest. It offers personal and business banking with more than 3,000 branches and 5,000 ATMs. Over the years, Bancorp has worked to become a responsible financial provider and earn a spot on the Ethisphere Institute’s World’s Most Ethical Companies list.
As a Bancorp customer, you can access information about your accounts through Google Home and Amazon Alexa. You may also download the handy mobile app to make mobile deposits and perform other services, like transactions via Zelle.
5. PNC Financial Services Group
Total Assets: $534.35 Billion
Headquarters: Pittsburgh, Pennsylvania
PNC is short for Pittsburgh National Corporation. PNC Financial Services is the bank holding company of PNC Bank, which has more than 2,000 branches across 21 states. It stands out among other large banks for its unique customer perks and products for individuals and business owners. The Virtual Wallet tool, for example, lets you manage your money online or on your mobile device.
You can keep your checking and savings accounts together or just stick to one type of account, depending on your particular needs. In addition to traditional banking services, PNC offers mortgages, home equity lines of credit, auto loans, personal loans and personal lines of credit, student loans, and student loan refinancing.
6. Wells Fargo
Total Assets: $1.71 Trillion
Headquarters: San Francisco, California
Wells Fargo made its debut in 1852 when it was first opened by investing partners, Henry Wells and William Fargo. It was initially designed as a bank and express delivery service for gold. Eventually, Wells Fargo expanded as a consumer bank to serve all types of customers with various banking needs. It is admired for its long list of offerings and the Wells Fargo mobile app that helps customers track their spending and simplify their bills.
While Wells Fargo has focused on consolidating and prioritizing digital banking services in recent years, it still has about 4,700 locations and more than 12,000 ATMs around the U.S.
In addition to personal and small business banking, Wells Fargo supports commercial banking, investing and wealth management, and investment banking.
7. Truist Financial Corporation
Total Assets: $532.08 Billion
Headquarters: Charlotte, North Carolina
Compared to the other large commercial banks on this list, Truist is fairly new. It was formed in 2019 as the result of one of the largest bank merger between BB&T and SunTrust.
Truist is made up of three major divisions, including Truist Bank, Truist Securities, and Truist Insurance Holdings. These divisions employ over 37,000 people that work in consumer and commercial banking, investment banking, mortgages, and insurance.
It offers a variety of noteworthy perks, such as no overdraft fees, a $100 negative balance buffer, and automatic upgrades. The bank also places a lot of emphasis on community involvement and giving back.
8. Goldman Sachs Group, Inc.
Total Assets: $501.91 Billion
Headquarters: New York City, New York
Goldman Sachs was founded in 1869 by Marcus Goldman, a German American shopkeeper. Its original purpose was to help merchants and small businesses with short-term funding. Eventually, Samuel Sachs joined Goldman in 1882. Today, Goldman Sachs has a reputation as a leading global investment banking, management, and securities firm.
In the fall of 2016, Marcus by Goldman Sachs, its online banking division made its debut and began to offer numerous financial products, like savings accounts, certificates of deposit, credit cards, and loans.
In addition to these offerings, Goldman Sachs provides asset management services, mutual funds, investment banking and management, prime brokerage, commodities, and commercial banking.
9. Charles Schwab Corporation
Total Assets: $407.90 Billion
Headquarters: San Francisco, California
Charles Schwab is a multinational financial services firm with a focus on investment accounts, such as individual retirement accounts (IRAs) and brokerage accounts.
You’ll find an extensive selection of funds with low expense ratios as well as commission-free stock and ETF trades. While there are over 360 Charles Schwab branches with financial consultants, you can take advantage of its services online.
Schwab also offers a high-yield checking account. Whether you’re new to investing or consider yourself a veteran, you can benefit from Charles Schwab.
10. TD Group U.S. Holdings
Total Assets: $405.22 Billion
Headquarters: Wilmington, Delaware
While TD Bank has roots in Canada, it’s been in the U.S. market since 2007 when it acquired Commerce Bancorp. There are more than 1,100 branches and 700 ATMs across fifteen U.S. states and Washington D.C.
TD Bank offers the typical lineup of banking products and services but is known for its branch convenience. Most branches have long hours, are open on the weekends, and provide curbside pickup for new debit cards.
If you prefer in-person banking, TD Bank is certainly worth exploring. Many of its accounts come with generous sign up bonuses and access to comprehensive online banking features, such as online bill pay, Zelle, and remote check deposit.
11. Capital One Financial
Total Assets: $388.44 Billion
Headquarters: McLean, Virginia
Since it was established in 1988, Capital One bank is one of the newer large banks on our list. In only a few decades, the bank has grown significantly, thanks to its credit card offerings in the early 90s.
Once 2016 came around, Capital One was named the third-largest credit card issuer in the U.S. These days, Capital One continues to offer credit cards as well as digital services through Capital One 360.
Capital One 360 stands out for its Capital One’s 360 Performance Savings account, which comes with no minimum opening deposit and no minimum balance requirements.
It also has a mobile banking app with mobile check deposit, customized alerts and notifications, Zelle, free credit score monitoring via CreditWise, and more. There are about 775 branches, 2,000 ATMs, and nearly 30 Capital One cafes.
12. Bank of New York Mellon
Total Assets: $365.10 Billion
Headquarters: New York City, New York
Bank of New York Mellon came about after a 2006 merger between Mellon Financial Corporation and The Bank of New York. The Bank of New York was originally founded in 1784 by Alexander Hamilton, the first Secretary of the Treasury of the U.S. Bank of New York Mellon is now one of the largest securities firms in the word.
It specializes in a number of solutions and services for corporations, insurance companies, banks, brokers, dealers, and other reputable clients in the financial industry. In addition, the bank offers private investment and wealth management services for wealthy clients.
13. State Street Corporation
Total Assets: $296.43 Billion
Headquarters: Boston, Massachusetts
State Street Corporation was founded in 1792 as a financial services and asset management company. It has more than 40,000 employees and a global presence in over 100 markets.
Its offerings include investment research and trading, investment management, and securities lending for clients, such as insurance companies, pension funds, and asset owners.
14. Citizens Financial Group
Total Assets: $226.53 Billion
Headquarters: Providence, Rhode Island
Citizens Financial Group, Inc. has been around since 1828. It owns Citizens Bank, its retail division and offers credit cards, deposit accounts, personal loans, student loans, refinancing, and a number of other financial services. Citizen Bank mainly operates in the Northeast and Midwest.
In addition to more than 2,700 ATMs, there are over 1,100 branches in New England states as well as Delaware, Michigan, Ohio, Pennsylvania, New York, and New Jersey. The bank provides extended call center hours, a streamlined online experience, and a highly rated mobile app.
15. Silicon Valley Bank
Total Assets: $211.82 Billion
Headquarters: Santa Clara, California
Silicon Valley Bank made its debut in 1983. Today, it serves as a full-service commercial bank for technology and life sciences companies. Aside from traditional banking services, Silicon Valley Bank offers foreign exchange, venture capital, and treasury management services.
It has supported innovation for several well-known tech companies, including Google and Facebook. Many people give it credit for establishing Silicon Valley.
16. Fifth Third Bank
Total Assets: $205.55 Billion
Headquarters: Cincinnati, Ohio
Fifth Third Bank is a subsidiary of Fifth Third Bancorp and known as one of the largest banks in the Midwest. It has approximately 1,100 branches that span across Ohio, Florida, Georgia, Kentucky, Illinois, Indiana, Michigan, North Carolina, Tennessee, and West Virginia.
As a customer, you can enjoy access to more than 50,000 ATMs across the country and no opening deposit requirements for checking and savings accounts.
In addition to deposit accounts, Fifth Third Bank financial institutions offer mortgages, auto financing, personal loans, insurance, and investing products. Products and services are available to business customers as well.
17. First Republic Bank
Total Assets: $197.91 Billion
Headquarters: San Francisco, California
First Republic Bank is a premier private bank with more than 80 branches across the country. Its vast lineup of products and services includes checking accounts, savings accounts, money market accounts, IRAs, CDs, and wealth management.
Business customers can take advantage of business loans, business lines of credit, commercial real estate loans, and small business loans. The bank focuses on philanthropy and constantly supports programs related to art and education.
18. Morgan Stanley
Total Assets: $191.35 Billion
Headquarters: New York City, New York
Morgan Stanley’s roots date back to 1935. Today, the bank is a reputable, multinational investment management and financial services company. It has over 700 locations in every state as well as Washington D.C.
Its investing division includes three portfolios, including the impact portfolio, market-tracking portfolio, and performance-seeking portfolio. Whether you’re a beginner investor or wealthy client, Morgan Stanley may be a solid pick.
19. KeyBank
Total Assets: $184.67 Billion
Headquarters: Cleveland, Ohio
KeyBank was founded in 1825 and is now considered a community bank with a presence in 15 states. It has more than 40,000 ATMs in its network and 1,000 full-service branches. The bank also partners with the AllPoint Network of over 40,000 ATMs nationwide.
Its standard services include checking accounts, savings accounts, home loans and mortgages, lines of credit, credit cards, investing, insurance, and debt consolidation. In 2021, KeyBank acquired several digital businesses including digital platform XUP Payments and GradFin, a student loan counseling fintech.
20. Ally Bank
Total Assets: $182.2 Billion
Headquarters: Sandy, UT
While it’s based in Utah, Ally Bank is an online only bank with a long list of digital banking solutions. Its deposit accounts come with no monthly maintenance fees or minimum balance requirements.
The bank also pays high yields on CDs and savings accounts than traditional banks with brick-and-mortar banks. As a customer, you can enjoy 24/7 customer services and access to more than 43,000 ATMs through the Allpoint network.
Bottom Line
As you can see, there are many large banks in the United States. Each one has its own unique perks and priorities. To choose the right bank, consider your location, needs, and preferences.
If you’re looking for personal banking services and prefer a digital platform, Goldman Sachs and its Marcus division may be the way to go. But if private wealth management is your top priority, you may be better off with Bank of New York Mellon. Best of luck in your search for the perfect large bank.
Largest Banks in the U.S. FAQs
What is a bank?
Put simply, a bank is a financial institution that can legally accept checking and savings deposits and distribute loans. Some banks also offer additional services like certificates of deposit (CDs), individual retirement accounts (IRAs) and wealth management.
What is the largest bank in the world?
The Industrial and Commercial Bank of China is the largest bank in the world. The bank’s assets add up to $4.324 Trillion.
What are the ten largest banks in the U.S.?
Ranked in total asset value, the ten largest banks in the U.S. include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, PNC, Truist Bank, Goldman Sachs, Charles Schwab, and TD Group.
How do I choose a bank?
To choose the right bank, focus on what you’re looking for. For more personalized service, you might want to explore a community bank. But if you prefer branch locations across the country and a long list of offerings, one of the large banks on this list might be a better fit.
Is my money safe in a bank?
Your money is safe as long as the bank is insured by the Federal Deposit Insurance Corporation (FDIC). An FDIC-insured bank typically insures up to $250,000 per depositor. Note that you don’t have to purchase FDIC insurance. As long as you’re a customer at a bank that offers it, you’ll receive it automatically.
How does a commercial bank differ from a retail bank?
A commercial bank offers a variety of products and services to both individuals and businesses. Retail banks, on the other hand, focus their offerings to individual customers. If you own a business, you’d be better off with a commercial bank that can serve the financial needs of your organization.
Do online banks exist?
Absolutely! In today’s day and age, online banking is more popular than ever before, among larger banks and smaller banks. While some banks offer in-person and online services, other banks, like Ally Bank, solely operate online with no branch locations.
What are some other large banks not on this list?
Other big banks you might want to consider include First National Bank, Huntington Bank, Provident National Corporation, America Bank, and HSBC Bank USA.
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Downsizing can be a daunting task, especially when it comes to transitioning to a smaller living space. The decision to downsize often comes with a myriad of motivations. Some may be seeking to downsize their home to free up time, money, and energy for other pursuits, such as travel or hobbies. Others may be empty nesters looking to rightsize their living space after their children have left home. Still, some individuals may be approaching retirement or transitioning to a different stage of life, where smaller and more manageable living arrangements become appealing.
Whatever your reasons for downsizing, it’s crucial to approach the process with a clear vision of what you hope to achieve. Downsizing offers an opportunity to shed the unnecessary and create a living space that truly supports your lifestyle and values. Whether you’re moving to a smaller house, a condo, an apartment or exploring the options offered by tiny homes or senior living communities, these tips will help you make informed decisions and create a space that feels like home.
By following the tips in this article, you can make the downsizing journey smoother and create a comfortable, fulfilling living environment.
1. Evaluate your needs and priorities:
Before starting the downsizing process, evaluating your needs and priorities is essential. Consider factors such as location, amenities, proximity to healthcare facilities, social opportunities, and your desired lifestyle. Knowing what is most important to you will help you make informed decisions throughout the downsizing process.
2.Declutter and organize:
Downsizing is the perfect opportunity to declutter and streamline your belongings, letting go of some of your accumulated possessions over the years. Take the time to declutter and organize, separating items into categories: keep, donate, sell, or discard. This process can be emotionally challenging, but remember that downsizing allows for a fresh start and a chance to focus on what truly matters.
3. Maximize space:
In smaller living spaces, efficient space utilization is crucial. Look for furniture that serves multiple purposes, such as storage ottomans or beds with built-in drawers. Utilize vertical space with wall shelves or hanging organizers. Make sure to measure the new space to ensure your existing furniture will fit appropriately and leave room for comfortable movement.
4. Consider accessibility:
As we age, it becomes increasingly important to consider accessibility features in our living environment. Look for homes or communities that offer step-free entrances, bathroom grab bars, wide doorways, and other accommodations promoting safety and independence. Prioritizing accessibility can provide peace of mind and enhance your overall quality of living as you age in your new home.
5. Research independent senior living communities:
If you are of age to do so, consider independent senior living communities. Look for communities that align with your needs and interests. Consider factors such as the range of activities and amenities available, the community’s reputation, the quality of healthcare services offered, and the level of social interaction. Visiting the communities in person and talking to current residents can provide valuable insights.
6. Plan your budget:
Downsizing can have financial implications, so planning your budget is crucial. Consider the costs associated with the move itself, potential renovations or repairs, and ongoing expenses in your new home. Having a clear budget in place will ensure a smooth transition and help you make sound financial decisions.
7. Seek support:
Downsizing can be overwhelming, both physically and emotionally. Don’t hesitate to seek support from friends, family, or professional organizers who can assist with the process. Their assistance and guidance can make the downsizing journey much more manageable.
Additionally, if you are moving into an independent senior living community, you can reach out to local senior support organizations that offer resources and guidance specifically tailored to downsizing as an older adult.
Downsizing your home is a significant change, but with proper planning and consideration, it can be an exciting opportunity for a fresh start. By evaluating your needs, decluttering, maximizing space, considering accessibility and future needs, planning your budget, and seeking support, you can navigate the downsizing process successfully. So embrace the possibilities that come with downsizing and create a comfortable and efficient living environment that suits your lifestyle!
Jennifer Bell is a carer for two aging parents, tiny home lover, and writer for senior living communities in Philadelphia.
Amazon and the Amazon logo are trademarks of Amazon.com, Inc, or its affiliates. Rental providers will not refuse to rent a rental unit to a person because the person will provide the rental payment, in whole or in part, through a voucher for rental housing assistance provided by the District or federal government.
Are you a Millennial or Gen-Xer that has contemplated investing but doesn’t know where to begin? Micro-investing apps are a way to get your feet wet and are designed to encourage the younger generation to start investing.
If you are new to or know little about micro-investing, this guide will give you the information you need to get started. It will cover the best micro-investing apps for Millennials and everything you should know about micro-investing including what it is, how it works, and how to choose an app.
What’s Ahead:
Overview of the best micro-investing apps for Millennials
Acorns
This is one of the first and most popular micro-investing apps around. Account portfolios range from conservative to aggressive. This app will recommend portfolios based on your age, the risk you are willing to take, and what age you anticipate you will retire. Acorns takes the hassle out of investing by providing a micro-investing service. With one click, you can get started with any amount and automatically invest it according to your risk tolerance level–no more worrying about saving up money for each separate investment.
And if that’s not enough, Acorns also rewards its customers while shopping at partner stores through their Found Money program; they offer cash back without all the work because you’ll have an extra boost in your portfolio every time you shop online or offline. Acorns makes it easy for anyone to start investing – even kids. You can open accounts on behalf of those under 18 years old and build them up as parents monitor progress from afar via their family plan option.
Acorns has some really fun and interactive educational resources for those who are new to micro-investing, too. No minimum deposit is needed, so you can start investing with just $5. You’ll also get a referral bonus when you refer someone else or find a job offer — Acorns will match your investments up to the first year in which they work there. In other words, it’s free money.
The fees for micro-investing with Acorns are based on the level of account that you sign up for. The monthly fees can be as low as $3 per month or as high as $5 per month. You can choose between Personal and Family account levels:
Personal – $3 per month gives you the benefits from personal services such as a checking account with a debit card and no account fees or ATM fees and the ability to earn up to 10% bonus investments.
Family – $5 a month, and the entire family can invest. You can add any number of kids with no extra fees and access exclusive offers, in addition to the benefits from the Personal account type.
You can sign up for this micro-investing app through their website or by downloading their app on a device that uses iOS or Android operating systems. As with other micro-investing apps, you provide information about yourself, create a username and password, pick the type of account you want to sign up for, fund your account, and begin investing. One drawback of Acorns is that fees can add up for a low-balance account (the relative expense ratio gets smaller as you invest more), and transferring to another provider will cost $50 per ETF.
Learn more about Acorns or read our full review.
Robinhood
Robinhood is a micro-investing app that lets you buy and sell stocks, ETFs, options, and cryptocurrencies with zero trading fees. It’s the best place to start investing online because it’s the only free investment app on the market.
Robinhood was created by a couple of engineers who wanted to make stock trading more accessible for everyone. They had no idea that their little side project would eventually become one of America’s most popular financial apps.
The app is available for iOS or Android devices as well as through a web browser. To sign up for an account, you must be 18, with a valid ID to pass the company’s Know Your Customer (KYC) process. Robinhood also provides $3 – $225 in free stock when you sign up through their mobile app on iOS or Android device or their website.
Robinhood does not offer multiple account types to choose from but doesn’t charge any commission fees. Hence, trades are always at a flat rate of $0 per trade, making it a viable option for newer investors. Note that if you decide to transfer out of Robinhood, you’ll pay $75 – otherwise, there are no fees.
Learn more about Robinhood or read our full review.
Betterment
This app is designed for hands-off Millennial investors. Betterment works similar to other apps, with multiple portfolio options and automatic rebalancing of your portfolio. Betterment is a low-cost, automated investing service that takes care of everything for you. You can invest with as little as $25 and get the help of a financial advisor when you want it. It’s a robo-advisor that offers many different types of investments including index funds and exchange traded funds (ETFs) so your money will be diversified across multiple asset classes to reduce risk.
Betterment was founded in 2008 by Jon Stein who wanted to make investing easy and accessible for everyone. He created an automated system where users could set up their account, choose what type of portfolio they wanted, and then let Betterment take care of the rest – automatically rebalancing every day to keep things evened out.
There are two types of Betterment accounts:
Betterment Digital – 0.25% annually of assets managed featuring no minimum requirements, with the option to purchase a financial advisor package. You receive free automatic rebalancing of your portfolio when it drifts 3% or higher.
Betterment Premium – 0.40% annually of assets managed, and you must maintain a balance of $100,000. In addition to Betterment Digital features, you receive unlimited access to certified financial planners by phone or email.
You can purchase a consultation with financial advisors with packages ranging from $199 to $299 for individuals with a Betterment Premium account.
Betterment makes it easy to get started with your investing. Signing up is quick and accessible through the mobile app or web-based browser, you can link an account for deposits via bank transfer, wire transfers are also available but not recommended due to fees (for example $25 on top of any other charges).
Once signed up Betterment will set up a portfolio that reflects your goals based on questions asked when signing in such as what level of risk do I want? Based on these responses they’ll design a personalized investment plan just for you.
Learn more about Betterment or read our full review.
Twine
This micro-investing app allows you to invest and reach financial goals with a spouse, partner, or friend. Unlike other micro-investing apps, the focus is placed on low-cost ETFs instead of micro shares. Funding your account is done through recurring or one-time deposits, and you need $100 in your account to begin investing, though you can start an investment account with $5.
Twine was founded with the mission of making small, smart investments in people’s futures. They’re a micro-investing company that allows you to set up financial goals and an expected timeframe for these goals so they can reach them quicker than if it were on your own.
To do this, Twine has created three portfolio types: conservative, aggressive and moderate; which are designed specifically based on how much money is needed when investing as well as what time frame someone needs their goal met by.
There are two ways to get started: one being merely setting up a user account online or through an iPhone app (iOS). You can also invite another person to invest alongside you via email invitation – meaning not only will both of your funds grow together but Twine will help you reach your goals faster.
Twine micro-investment accounts are charged either $0.25 per month for every $500 invested or 0.60% annually with no minimum.
The process of signing up is similar to other apps. You provide your information, set a financial goal, invite someone else to invest with you, and begin funding and investing while monitoring your progress along the way.
On the downside, the mobile app is only for iOS operating systems only. It is more costly than other micro-investing apps and lacks the features that most of these apps offer, such as funding options and the option of fractional shares.
Learn more about Twine or read our full review.
Stash
Stash makes it easy and affordable for anyone to utilize and open an account. With Stash, you have more freedom and flexibility than other micro-investing apps.
Stash lets you invest in as little or much as you want and pick the companies, organizations, or causes that you trust. As your holdings grow, so does your potential to invest in what you believe in.
Stash eliminates any fees, commissions, or transaction charges–and they’re always working on adding more stocks to their portfolio for even more possibilities. With the new Stock-Back debit card featuring rewards in stocks opposed to store credit points (which can be converted into cash), it’s just a smarter way to use money every day.
There are two tiers of accounts with Stash:
Stash Growth – $3 a month gives you access to the benefits of Stash Beginner plus Smart portfolio and additional personal features. Smart Portfolio is a Stash feature that builds a custom portfolio for you based on research and risk level.
Stash+ – $9 a month allows you to enjoy the benefits of Stash Growth with bonuses. You can open accounts for your kids (max two kids), receive $10,000 in life insurance, and access additional and exclusive Stock-Back card bonuses.
There are three options you can choose from to add money to your Stash account.
Set recurring deposits to your Stash account.
Round-up purchases are made with your linked debit card, and the difference is invested.
Smart-Stash is a feature where your spending and earnings are analyzed, and money is stashed based on this information. You can then set transfer amounts to $5, $10, or $25 max.
The signup process is easy and straight-forward. You answer a few questions, pick a plan, add money to your account, sign up for the banking services offered to receive the Stock-Back debit card, and begin investing. You have the option to create and track your goals using the Stash app.
One minor drawback is the fees, as with any micro-investing app, are the biggest drawback of Stash. The subscription fees per month can add up if you have a low balance. The annual average expense ratio is roughly .25%.
Learn more about Stash or read our full review.
Public
This is a micro-investing app that incorporates the use of the social networking community with investing. It uses social networking as the basis for swapping strategies and learning from others.
Public is the easiest way to invest. You can invest in stocks, ETFs, and crypto-all in one place with any company and get their take on new money, wrapping up your earnings neatly at monthly intervals so that you don’t have to worry about throwing away all of your cash on material things.
It’s like an investment buffet where all of your favorite individual stocks are united in one easy-to-manage account with no minimum balance requirements and commission fees. All you need is a slice of Public, some greasy fries (tip not included), and the best TV binge ever.
You only pay fees when purchasing shares. There are no membership levels, no account fees, and you can begin using your account when you sign up.
The signup process is easy and convenient. You can sign up through the mobile app available from the Apple Store or Google Play Store.
The biggest drawback of the app is the risk of following advice from strangers about strategy and investing.
Learn more about Public or read our full review.
SoFi Invest
No account minimum and you can start investing with $1? Sign me up!
SoFi (social finance) is a financial planning company formed in 2011 and offers various products, including micro-investing. SoFi allows you to trade online through their app when you want and what you want. This micro-investing app is designed for Millennials looking for a lot of perks.
SoFi Invest is perfect for newbies who want to be hands off without sacrificing returns. You’ll still have plenty of options though – if you’re more adventurous and want control, go ahead and customize how your fund performs by adjusting frequency, risk tolerance, investment view, holdings duration, and cash flow strategy.
With this money-saving feature the only thing that will cost you is an ACAT transfer fee when transferring outside funds into your share class account through an ACH bank-to-bank or wire payment method – seriously easy stuff for any price-sensitive investor out there.
There are no account or asset management fees, and you do not need a minimum account balance to get started.
There are two options for signing up with SoFi Investing:
SoFi Active Investing – Allows you to control what you invest in based on your preferences, including the risk level you are comfortable with. You have access to a community of micro investors like yourself, certified financial planners, and other valuable resources at no cost.
SoFi Automated Investing – This is a more hands-off approach allowing you to use an automated platform to build and manage your portfolio. You receive the same perks offered with SoFi Active without investing time in researching and managing your portfolio.
You can sign up for SoFi Investing using a desktop or their mobile app. You will be asked for basic information. The signup process, including creating your account and scheduling a deposit, takes about 2-5 minutes to complete. It takes 1-2 business days for funds from your deposit to post to your account after your account is approved.
On the downside, SoFi does not offer tax-loss harvesting, and it has a limited track record compared to other micro-investing providers.
Learn more about SoFi Invest or read our full review.
Stockpile
This is a micro-investing app designed for young beginner investors who need something simple to get started with investing. You can access this app through a web-based browser or a device using iOS or Android operating systems.
Stock options can be complicated, but Stockpile makes it easy. With their fractional shares, you’ll have an easier time growing your investment portfolio and don’t have to worry about commissions.
It’s a great option for kids who want to get started early with their own investing or do so on behalf of others as well. When you’re ready to buy the gift that every investor loves, they offer physical stocks in addition to gift cards plus support from their customer service team if you need any assistance along the way.
There are different ways to fund a Stockpile account, link your bank account, and redeem a gift card. You can connect your checking account to move money in and out of your Stockpile account free of charge or use your debit card for a 1.5% convenience fee. If you use your debit card to fund your account, it is done instantly. Using your checking account takes 3-5 business days.
Gift cards cost $2.99 for the first stock. Additional stocks are $.99 each. Purchasing gift cards with credit or debit have an additional fee of 3% of the gift card’s value. Physical plastic cards cost an additional fee ranging from $4.95 – $7.95, depending on the card’s value.
The cost to trade on Stockpile is $0.99 per buying/selling trade. There are no annual or account management fees associated with the account.
The process for opening a Stockpile micro-investing brokerage account is simple. You create an account by providing basic information, fund your account, and begin choosing from the available stocks and ETFs.
Despite the user-friendly interface and simplicity of this app, there are drawbacks. This includes limited account and investment options and minimal tools available to analyze and research stocks.
Learn more about Stockpile.
Summary of the best micro-investing apps for Millennials
App
Minimum to start
Unique features
Acorns
$0
Family plan includes a checking account, retirement account, and custodial accounts for children
Robinhood
$0
Invest in cryptocurrency
Betterment
$0
Tax-loss harvesting
Twine
$0
Shared savings and investment goals for couples
Stash
$0
Get “stock-back” on debit card purchases
Public
$0
Follow and engage with others a la social media, only with investments
SoFi Invest
$0
Ability to connect with Certified Financial Planners
Stockpile
$0
Buy stocks with any dollar amount
How we came up with our list of the best micro-investing apps for Millennials
When we were looking for apps to include on this list, there were a few things we wanted to focus on. Before you decide on an app, you need to compare different brokerages and what they have to offer. That said, we looked at apps that had strong reviews, were easy to navigate, and most of all, had little to no fees, including:
Withdrawal fees.
Cancellation fees.
Transaction or investment fees.
Account opening fees.
Monthly or annual fees.
Expense ratio fees.
You want to make sure that you know the actual cost of micro-investing apps and how fees are charged. This includes a flat rate or percentage of transactions.
What is a micro-investing app?
Micro-investing is a way to invest without needing a lot of money to get started. These apps are designed to get the younger generation involved with investing and overcome barriers that prevent Millennials from investing. The funds placed in these accounts are used to invest in fractional shares or ETFs.
Depending on the micro-investing app you select, you can link your debit card and have purchases that you make with the card rounded up to the next dollar then deposited into your account. You can also have automatic transfers of a specific amount placed in the account. A few apps will monitor and analyze your spending and earnings and set money aside that can be transferred to your account to purchase micro shares of ETFs or fractional shares of stock.
Why should you use a micro-investing app?
Micro-investing is a new platform when it comes to investing. However, it is gaining popularity among Millennials that don’t have a lot of money to invest. The main feature of this type of platform can invest micro amounts of cash. Other features are considered bonuses.
Here are other benefits of micro-investing:
Automated process including rebalancing portfolio and transfers of funds to a portfolio account.
Minimal management fees.
No minimum requirements to begin investing.
Some providers have an option for purchasing fractional shares.
Most apps allow you to manage your account from an iOS or Android device.
Why shouldn’t you use a micro-investing app?
If you’re a more advanced investor and you want more control over the individual stocks you invest in, a micro-investing app may not be the right option for you. Micro-investing apps are designed to make investing easy and accessible to newer investors (or investors who don’t want to deal with the hassle). That often comes at the cost of lacking some features more advanced investors would enjoy – like stock charts and the ability to do intense analysis.
Most important features of a micro-investing app
When you’re looking for an excellent micro-investing app, there a few key features you need to be aware of:
Good reviews
The first thing you’ll notice when you download the app is the number of customer reviews and how well the app is rated. It helps to look through what other customers are saying about the app before you decide on one. For example, some apps get buggy with new versions or newer phones.
Clean interface
The last thing you want when you’re trying to simplify your investing experience is a cluttered interface that makes investing confusing. Look at the screenshots of the app. Download it to play around with it. Watch videos of it on YouTube. Get a sense as to whether it will be easy for you to use before deciding.
Little to no cost
Most micro-investing apps make their money in ways that aren’t hitting you. Meaning, they might not pay an interest rate on your balance (and instead take that for themselves), or they might collect interchange fees when you use your debit card. Either way, micro-investing apps shouldn’t cost you an arm and a leg, so be sure to understand the pricing structure before you sign up.
Last week, I wrote about a conversation with my investment adviser. In the article, I mentioned that my current income roughly covers my current spending except that I’ve been spending an average of $2,000 per month on travel. Because of that spending deficit, I’ve been drawing down my medium-term savings, which should last me until the end of 2014. Meanwhile, I’m exploring a variety of options to bring the income and spending into equilibrium.
Some GRS readers were taken aback by this.
“Maybe the name of this blog should be changed to Get Poor Quickly,” Marsha wrote. Brian from Debt Discipline expressed the common concern that withdrawing from my investments seems like a step in the wrong direction. And Greg wrote that this blog must be losing its way if I’m writing about “stealing from the future to maintain a current lifestyle of travel.”
Other readers, however, took a different view.
Frugal Scholar noted that there’s nothing wrong with taking withdrawals if my total savings can support them. The always-perceptive Sam wrote, “If J.D. is living a life of semi-retirement, which it seems to me he is, then it would make sense to pull money from investments as that is what one does in retirement.” And EMH was even more direct: “Why have all those investments and not use them?”
I spent a lot of time replying to comments on last week’s article. In doing so, I noticed that I’d done a poor job of sharing all the facts about my situation. I’ve been timid about total transparency, which means readers don’t have all the info they need to make a judgment. Today, I want to change that.
It also occurred to me that there are differing opinions about what savings are for. On some levels, those differing opinions are a result of each of us having different plans and priorities. But I think something that gets missed is that money is used differently at different stages of life.
The Stages of Personal Finance
In February 2009, I wrote a meditative article about the stages of personal finance. This then led to a series of articles on the subject. Here’s how I defined them:
In the zeroeth stage of personal finance, we’re fumbling in the dark. We have no financial skills and has no idea how to best use our money. We live impulsively, reacting to life around us.
In the first stage of financial development, there’s a candle in the darkness, and we’re drawn toward the light. We become aware that certain actions produce better financial results. We learn basic skills like frugality and saving and debt reduction. We still make many mistakes, but we now have some idea of where we ought to be headed.
During the second stage of personal finance, we can see the light at the end of the tunnel. We’ve moved beyond the basics to create a solid foundation for future growth. We’ve eliminated debt, built up our savings accounts, established emergency savings, and begun to set aside money for retirement. We learn that we are in control of our financial future and not at the mercy of some vast, uncaring universe.
In the third stage of financial aptitude, you light the way for others. (Boy, my metaphors were strained!) Our foundation is solid, and we now spend years (or decades) constructing a financial edifice that will support us for the rest of our lives. That generally means paying off the mortgage, supercharging our income (and thus, our saving rate), and preparing for the ultimate goal…
The final stage of money management is financial independence. At this stage, we no longer need to worry about money. We have enough saved to do whatever we please. Because we each have different goals, strengths, and weaknesses, financial independence means different things to different people. Financial independence is really just another way to say “retirement.”
When I started this blog, I had just progressed from the zeroeth stage of personal finance to the first. Over the next few years, I documented my progress as I achieved greater knowledge and control of my money. Today, I am fortunate to be in that final stage of personal finance. I am financially independent.
What do I mean by financially independent?
Some people believe you’ve achieved financial independence only when you can live off the dividends or interest your savings produce. Others — including me — take the stance that you’re financially independent if, given reasonable assumptions (4 percent inflation, 6.5 percent long-term real return on stocks, 4 percent withdrawal rate, etc.) you’ll also draw down your principal.
As I shared in the comments last week, I could stop working today and live off my savings for the rest of my life. In essence, I could choose to retire early — if I wanted. But I don’t want to, and for several reasons:
By continuing to work, I earn more money, which does two things. When my income exceeds my expenses, I add to my stockpile. When my expenses exceed my income — as they do now — income mitigates how much I need to draw down my savings.
Work gives me meaning. I enjoy writing about personal and financial freedom. It’s fun. Plus, the emails I get indicate I’m able to help other people pursue their dreams as well. So long as work gives me purpose, I’ll continue to work.
For me, work creates social connections. I get to meet readers and colleagues and financial professionals, which helps me expand my knowledge and learn about lots of other things.
And so on.
When people choose to continue working even though they could call it quits, they’re said to be semi-retired. I think that’s an apt term, and that’s how I classify my current state. I am semi-retired.
What Are Savings For?
Saving is a key part of personal finance. In fact, I’ve come to believe it’s the key part of personal finance. When we save money, we build smart habits today while protecting and providing for our future.
That said, saving plays different roles in different stages of personal finance.
For instance, when you’re accumulating or repaying debt, saving ought not be a high priority. Aside from a minimal emergency fund (of $500 or $1,000), your money is better directed elsewhere. That’s why in my beloved Balanced Money Formula — which urges folks to spend less than 50 percent of after-tax income on Needs, more than 20 percent on Saving, and the rest on Wants — debt repayment is actually classified as saving. There are few uses for money that provide a better return than paying down credit cards and other high-interest loans.
Once debt is eliminated, however, saving becomes a high priority. During the second and third stages of personal finance, we work to build three types of saving:
Short-term saving, such as in an emergency fund. Most experts urge people to save between three and twelve months of their current spending so that they’re prepared if something unexpected happens, such as a job loss or catastrophic illness.
Long-term saving for retirement. This is why we save in a 401(k), Roth IRA, and other retirement accounts. We’re saving for the far future when we’ll be unable to produce income at the level we can today.
Medium-term saving is what I commonly call targeted saving. For most folks, this takes the form of saving for a car or a house or a vacation or for college education. But other people use medium-term saving as a way to fund sabbaticals and mini-retirements. Others use this money to quit their job and take a chance on a new business or a new career.
We save money for two purposes: To protect against an uncertain future and to help us fulfill our dreams.
Short-term savings and long-term savings are generally defensive. They’re a form of self-insurance to shield us from the slings and arrows of outrageous fortune. Medium-term savings is used more for offense; it’s to pursue the things that provide us pleasure and purpose.
There seems to be a subset of people, however, for whom it’s never acceptable to spend savings. We’re all familiar with folks who spend too much and never save, but there are also people who save too much and never spend. They’re mocked in books like A Christmas Carol and Silas Marner. They’re demonized in movies like It’s a Wonderful Life. But for some reason, in real life, these types are often considered heroes. This puzzles me.
I see nothing heroic about dying with a fortune. I see nothing noble about saving and saving and never spending. Money is a tool. Its purpose is to provide comfort and pleasure for ourselves and for others. Saving isn’t an end in and of itself. We accumulate savings so we can do the things we want to do.
My Own Situation
In the past, I’ve been close to the vest regarding my financial situation. My attorney, my accountant, and my ex-wife all wanted me to keep things quiet. However, after some recent conversations — including one with Pat Flynn — I’ve decided to be more transparent. I can’t (and won’t) reveal everything, but I’ll share some broad info.
I’ve already shared that I’m currently outspending my income by about $2,000 per month because of travel. That’s what got some people riled up last week. I’ve also shared that I have enough medium-term savings to maintain this deficit until the end of 2014 (meaning I have about $25,000 saved for this purpose). I also have about $5,000 in emergency savings. Plus, I’m fortunate to have over a million dollars in long-term retirement savings.
Note: Yes, it’s true: While writing a blog about how to get rich slowly, I got rich quickly. This irony is not lost on me. One commenter last week suggested that this could cause problems since I didn’t have time to build the necessary mindset to manage the money. This is a valid concern, and one reason I’m trying to be cautious and make only “small moves.” I’ve read plenty of horror stories about people who squander sudden wealth.
In an ideal world, I’d be earning an income that meets my expenses. And, in fact, that was the whole point of last week’s article; I’m looking for ways to bring earning and spending into alignment. At the same time, I feel no shame about outspending my current earnings by $2,000 per month. Why not? Because that’s what my money is there for.
If I were still in debt, this $2,000 monthly deficit would be a concern. If I had only minimal savings, it would still be a problem. But I’d argue that even for somebody in the third stage of personal finance, deficit spending for a short time is perfectly acceptable. And if you’re in the final stage of personal finance? Well, then that’s actually how you’re expected to be living. When you’re retired, you’re drawing down your capital.
Note: Last week I wrote that Mr. Money Mustache would probably advise me to be more frugal. I was wrong. After reading the article, MMM e-mailed me to say: “Just enjoyed your latest post on GRS. I think you might be underestimating your passive income from savings…Since this is more than your spending by a wide margin, I would feel very confident that all your work income is 100% optional. Of course, you should still do enjoyable work because it makes you happy just as it makes me happy. But the paycheck is really just some icing on the cake.”
In fact, the fundamental problem of personal finance is figuring out how much to save so that you can live off your investments in retirement and die with a zero balance. (Or, if it’s your intention, to leave money to others.) A quick calculation (using conservative assumptions) shows that I could choose never to work again and even if I lived until 80, my assets would allow me to live on about $4,000 per month for the rest of my life. If I sold my condo, that number would climb to $5,000 per month.
And if I chose to spend $2,000 per month, which was the idea that created such a fuss last week? According to FIRECalc, my money will probably never run out! And, in fact, because of the extraordinary power of compounding, my savings will continue to grow forever.
The Bottom Line
Last week’s discussion was fascinating. If I were to draw down my savings in one fell swoop in order to buy a car or to purchase a house, I doubt anyone would object to my actions. After all, that’s how we think savings should be spent. But because I’m choosing instead to use my savings to fund travel and to buy time while I look for additional ways to make income, some people think I’m being foolish.
I suspect that even after this long discussion of saving and retirement, there will still be folks who believe it’s irresponsible for me (or anyone else, for that matter) to draw down savings for this sort of thing. If that’s you, tell us what you find objectionable. Under what conditions do you believe it’s okay to draw down savings? Does it matter which phase of personal finance you’ve reached? How do you decide when it’s okay to use the money you’ve saved to do the things you want to do?