Personal Finance Hacks (Ages 18–30)
How to Open a Bank Account & Invest your Money in less than 2 Hours
The biggest mistake most people make with regard to their finances is inaction (especially college students and young professionals). So this post is going to be incredibly biased towards action. Section 1 will explain what to do, section 2 will explain why.
Step 1: Setup a Great Bank Account (34 minutes)
Call Ally Bank (1–877–247–2559). Tell them that you want to open a Checking and a Savings account. They will ask for your name, email, address, social security number, and a password. They will set you up over the phone. Ask the person on the phone to setup automatic overdraft protection from your savings account for your checking account. Ask them to help you transfer your money from your current bank to Ally Checking Account. They will need your Account Number and your Routing Number from your existing bank. This transfer should take 3–4 business days. Within the same time period you will also get an Ally Debit Card and Checks in the mail. I believe you have to be a US Citizen (maybe permanent resident?) to use Ally Bank.
Why Ally Bank?
The foundation to your financial setup is your savings and checking accounts. There are so many to choose from, so which should you pick?
Ally Bank.
While most banks are a headache to deal with, will keep you on hold on the phone listening to classical music for 15 minutes before you actually get to talk to a real human, give you a 0.01% interest on your savings, and charge you random fees for a slew of different situations, Ally is the complete opposite.
Ally has phone support available 24/7, never again will you call on the weekend or after work (when you actually have time) to learn that you should call back Monday morning. Ally has it’s phone number and the wait time expected for a call prominently displayed on its website. I’ve never seen the wait time exceed 1 minute. Often they also have live online chat available.
Ally automatically reimburses its customers up to $10/month on all ATM fees, which means that if you use the ATM less than 3 times per month you can use any ATM in the U.S. without worrying about fees. Convenient.
Ally is able to provide such incredible customer support because it is an online only bank. As a result it can save money by not having physical branches, and it passes those savings onto it’s customers and invests it into excellent support. Ally has no monthly maintenance fees, no minimum deposits, and no transaction fees. O, and it will also give you a 1.65% Annual Percentage Yield on your savings account.
I’ve hated, some banks I’ve used in the past. Ally I LOVE. It is one of my favorite products. It’s great when banking becomes a fast, fluid experience. If you already have a bank, and you don’t LOVE it. Please, take 30 minutes right now and change to Ally Bank. You will thank yourself so many times over and over and over again over the next few decades that you did so. Especially if you are currently using Wells Fargo as your bank, there is no excuse, drop everything and switch to Ally now. That was the switch I made and it’s night and day.
Step 2: Invest Your Money (30 minutes)
Call Vanguard (800–992–8327). Tell them that you are not yet a Vanguard member and that you want to open an investment account. They’ll ask you how much you want to invest. Have a number in mind. It can be as small or as big as you like, there are no minimums. Ask them to help you make the transfer from your bank account to Vanguard. I recommend investing in a Vanguard ETF that has the minimum fees possible and follows the S&P500 so your money will grow as the market grows (almost no one beats the market).
From experience, the best interface for dealing with financial institutions is over the phone. They will guide you through everything and let you jump through all the hoops faster than doing it online.
Why Vanguard?
Vanguard is essentially a non-profit, therefore any profits it earns essentially comes back to you in the form of lower fees. It also has an easy to use (for the most part) website and app and they answer the phone. Don’t like Vanguard? Like another method of investing your money? No problem, go do that, but do it now. Don’t wait. Invest your money now. Take 10% (or more) of your net worth and just put it in and ETF that mirrors that the S&P500. Just Do It™.
Step 3: Open a Credit Card With Good Points (20 minutes)
Apply online for Chase Sapphire Preferred. This is the credit card I would most highly recommend for an individual. It has great points for flights (enough for a round trip from SF to Boston twice if you spend $4k in the first 3 months). Chase’s online system is also super easy to use and very fast. They can approve your request online within 24 hours. To apply online go here. It has a $95/yr fee, but it is waived for the first year.
Once you get a credit card make sure to link it to your Ally Bank account to have automatic payments setup. Never allow a balance to carry on your card — this is not even an option you should consider. Ever. Treat your Credit Card like a debit card. It is never worth it to pay the ridiculous interest rate on credit card purchases. It is very useful to do all your online shopping with a credit card though, because transactions with credit cards are much more reversible than those with a debit card. So if someone steals your card or you want to dispute a transaction you can do so more easily with a credit card.
For all your financial touchpoints (Bank, Debit Card, Credit Card, Investing Account, etc) you should set up text updates so that every time something is bought with your card or money is moved between your accounts you can know about it).
Why Chase Sapphire Preferred?
It’s consistently ranked as one of the best credit cards, especially for travel. And they approve you almost immediately and get the card to you quickly with no hassle. Main reason not to use it is if you don’t like to travel and would prefer to get cash back, in that case optimize for a card that will give you high cash back for what you spend on. If you do expect to take at least 2 flights this year just get the Chase Sapphire Preferred card. Don’t wait. Do it now.
Step 4: Get some Bitcoin on CoinBase (20 minutes)
Register and buy some Bitcoin on CoinBase.
No one knows if cryptocurrencies will take off or not. But if they do, the upside will be pretty gigantic. The backbone of the cryptocurrency world is Bitcoin so it is the least volatile crypto to invest in. It is very possible that Bitcoin will go to zero, but it is also very possible that Bitcoin will 10x in the next few years. So, just so you don’t have regret later it makes sense to put a little bit of money in Bitcoin. A common strategy is to put 1% of one’s net worth in Bitcoin (depending on your risk tolerance), but if you don’t know too much about it, I’d recommend just putting in what it won’t hurt you to loose. Then forget about it (but keep your login/password safe), and just hold the Bitcoin for a few years. The easiest way to buy some bitcoin is to go to CoinBase. I’d recommend initially just buying $100. You can do this instantly with your credit card, normally I’d say avoid the fee for buying with a credit card, but since Bitcoin is so volatile the single digit percentile fee will not make as big of a difference as waiting a few days will.
Further Reading:
If you think this was useful I would highly recommend listening to the audiobooks for I Will Teach You To Be Rich and for Money Master The Game:
Is there a lot of fine print you want to read in the process of opening all of these bank accounts and credit cards? Hate reading legalese? I got you covered. Download https://getspeechify.com/ on your Mac or your iPhone and it will read through any contract for you like a breeze.
The number of times reading a contract with speechify saved me from making a mistake is crazy. Try it, you won’t know how you lived without it. I couldn’t live without it. That’s why I made it :)
DISCLAIMER: Whenever you invest money there is a risk of loosing all or some of your money. The author of this article does not take any responsibility for the results of any investments you may make based on this article.
