Managing Your Money 101

DISCLAIMER: I’m not an expert in personal finance (far from it). These are just some suggestions based on personal experience — use your own judgement, YMMV. Also, some of the links below are referrals; if it is all the same to you, consider using them so we can both win!

So if I’m no personal finance expert, why am I writing this at all? Primarily because most of it is very common sensical and yet I keep running into people who haven’t heard of many of the tools and services I use.

First, what do I mean by “managing your money”? This post is not about growing your wealth (e.g. investing), or even conserving it (e.g. lowering taxes). It is about setting up a simple framework for managing your assets — a set of building blocks, if you will, that should give you a good foundation.

Personal finance (much like many other “expertise”-oriented industries) can be intimidating. But that is by design and the vast majority of us can get by just fine without hiring consultants and advisors.

Without further ado, let’s dive in!

Bank

First, you need a place for day to day transactions, receive your paycheck etc. The bottom line here is: stay away from the big banks (aka “too big to fail”).

I highly recommend opening a checking account with Ally: free checks, useany ATM in the world (Ally will reimburse you for any ATM fees!), no minimum deposits, no hidden fees, FDIC insured, deposit checks using your phone etc. The only downside is you can’t walk into a branch to get a cashier’s check.

Another good alternative is Simple, though a lot of what Simple offers in terms of analytics is duplicated by Mint and I prefer the latter.

Finally, if you absolutely feel the need to walk into a physical location, considering opening an account at your local credit union.

Credit Card

Next, you probably want a credit card (or two). Apart from the convenience of “credit”, having a credit card (that you diligently pay on time) will help your credit score.

For starters, I suggest just getting an Amazon credit card from Chase. You do shop on Amazon right? There’s no annual fee, and points earned can be applied directly during checkout on Amazon!

If you want a premium card (aka one with an annual fee), I highly recommendChase Sapphire. The first year is free and then it is $95/yr. Besides the various rewards and benefits, I’ve really enjoyed their customer service.

That’s really it. You don’t need an American Express or Discover.

Monitoring

Just sign up for Mint. Enough said.

Investing

First, watch this video. It is a bit long, but trust me, it is worth every minute:

TL;DR: it is very hard to beat the market. Don’t pick individual stocks, and if anyone tells you they can beat the market, consider it a red flag. Instead, just invest in stock & bond based index funds based on your risk appetite (e.g. 80% stocks, 20% bonds).

You can obviously do this yourself: just sign up with Vanguard; it is not a whole lot of work. But if you want some convenience (for reasonably low fee), I highly recommend Betterment. Another alternative is Wealthfront however they have a 5K minimum (full disclosure: I’ve invested with both, but I prefer Betterment).

Taxes

Until recently, I did not have a CPA. For the past 10 years, I’ve been preparing and filing my taxes myself. With help, obviously, from software. Turbotax is the undisputed king of this market, though I personally used and recommendTaxAct — similar feature, except it is much cheaper. Again, YMMV.

If you really want some personal attention, H&R block should be good enough.

If your tax situation is complicated, then find a CPA. Eschew Yelp reviews for this and instead, probe your social network(s) for referrals.

That’s all folks!

Well not really, but the above setup worked for me for many many years and should provide anyone a good foundation to build out from.

What are your favorite money management hacks/tips? I’d love to hear from you!