You Can Gain Control of Your Money & Financial Accounts!

Take Control of Your Money & Financial Accounts Step #1:Free Checking Account

First, open a free checking account that gives you an ATM card. Use this account to pay bills and hold spending money that you'll need for the month. If you have a paycheck that is direct deposited, you'll probably want to have it go in your checking account. You don't want to have too much money in this account since it won't earn interest. However, you also don't want to have too little and have to worry about bouncing a check or running out of immediate cash. You should already have a good idea of how much immediate cash you need, but give yourself a little extra padding. Bounced check fees are expensive! To be safe, I try to keep around $1,000 in my checking account.

Take Control of Your Money & Financial Accounts Step #2: High Yield Savings Account

Second, open an online high yield savings account. These will pay around 5% interest, which is nice for money that's liquid (easy to get to). If you want to sound fancy, you can even call this your money market account. This account will hold your savings that you won't need immediately. You should this account to your checking account online, and then you will be able to transfer money between them as you need. With this set up, your high yield dollars should never take more than a few days to become cash in your hands. This account will hold your emergency funds. The amount you need here can depend on certain factors. If you have a stable job with the federal government and are single, you might not need much in emergency savings. If you have a less stable job or have children, you may need enough to support you for 6-months. For your high yield savings account, I suggest ING Direct or HSBC.

Take Control of Your Money & Financial Accounts Step #3: Pay Off Credit Cards

Next, if you have any credit card debt, you should focus heavily on paying them off as soon as possible. If you are able, try to find a credit card that offers 0% balance transfers. Then transfer all your credit card debt to the 0% card, so that you can at least stop accruing interest. Then pay the accounts down and pay then pay them down some more! Credit cards charge extremely high interest rates, so there's little reason to invest until you pay them off. Also, a poor credit score will make car and home loans much more expensive.

Once you're free of credit card debt, you should never have credit card debt again...ever! Make a point of building up enough savings and only purchase something if you already have enough money to purchase it outright, with the exception of cars, education, and homes.

Now close your 0% balance transfer account and get a card that pays cash back. These cards charge poor interest rates, but that doesn't matter because you're going to pay the bill in full every month. I charge everything I buy, pay off the balance in full each month, and earn tons of free cash back. It's great!

Take Control of Your Money & Financial Accounts Step #4: Save for Retirement

Now that you're out of debt, you're ready to start building your net worth! If your company matches contributions to a 401(k) retirement account, then start there. This is like free money, and is a great deal. If you can, contribute an amount that gets you the maximum matching funds. If it sounds like a lot, remember that 401(k) money is pre-tax.

Think of it this way. Normally, if you want to buy something that costs $200, you have to earn $289, and then pay around 30% in taxes. Then you have your $200 to complete the purchase. But with your 401(k), you don't pay taxes. So to put $200 in your 401(k), you only have to earn $200. And you save $89 in taxes! If you don't have access to a 401(k), then you should start an IRA. You can start an IRA at any online trading site like E-trade or TradeKing. IRA's have the same tax benefits as 401(k)'s.

Take Control of Your Money & Financial Accounts Step #5: Invest

Once you get your retirement investing under control, you can start investments that you might want to use before retirement. Perhaps you will want to buy a house, a business, or a world vacation. If you're interested in learning about stocks, then you'll want to use TradeKing or ComputerShare and pick your own investments. If not, then mutual funds will make things easy for you. Expect to earn about 10% per year with these investments, although it's not a consistent 10% each year. Some years make a lot more and some years even lose some money. I suggest Transamerica Premier Funds. If you let them automatically deduct $50 or more from your bank account each month, they don't charge any fees to purchase. Also, many of their funds are highly rated. Not sure which fund to pick? Then choose the Balanced Fund, which invests in stocks, bonds, and commodities.

There you have it! There's nothing stopping you from taking control of your money and finances. You can do it!