Managing your Money for Beginners

There are generally four basic kinds of accounts you can deposit your money in:

• Checking Accounts – used for everyday transactions. Checking accounts allow you to pay bills, deposit money, and transfer money easily and securely.
   
• Savings Accounts – used to hold money that can earn interest over time. Savings accounts allow you to build wealth or save for a specific goal, like a trip. If you don't have an emergency fund, that should be your first goal! Savings accounts have some restrictions such as a low limit on transfers and withdrawals.
   
• Money Market Accounts – used to hold money that can earn interest overtime.  These accounts are a like a typical savings account with some checking account-like features. Money Market accounts typically come with a few checks or a debit card and allow a limited number of transactions each month. It is useful to have a checking account when you have a Money Market account so you can transfer money via your bank's online services to the checking so you do not use the Money Market checks. 
   
• Certificates of Deposit (CD's) –another way to save money, but there are some extra restrictions. When you deposit money into a CD, you agree not to touch that money for a certain amount of time. In return, the bank offers you interest and typically at a higher rate. CD's are not a good idea if you need to access your money quickly.   

You can access and manage your money using checks, debit cards, walking into a branch location, going online or through your bank or credit union's mobile app. 

Most people have at least a checking account but you can and should open a savings account when you are able.  

You can also open investment accounts like an IRA (Individual retirement account) at a bank.  These are not insured. You can click on the learning to invest tab to learn more about investing.  

In general, it's not a good idea to keep all your money stashed in your mattress or at the back of a sock drawer. Not only is your money uninsured, but it's not generating interest. 

Interest, in basic terms, is the cost of holding on to someone else's money. The bank or credit union is essentially paying you, because they are holding onto your money.

Some folks who don't have a bank account will use check cashing services when they get their paychecks.  However, those services can have high fees. You can avoid those fees if you deposit your money in a bank or credit union. To deposit means to put money into an account. To withdraw means to remove it. 

Most folks save their money in an account at a bank or credit union:

• Bank – a financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes. 
• Credit Union – serve a community of people tied by a “bond of association,” which may be based on location, employer, faith, membership in another organization, or other factors. An example would be the City of Boston Credit Union.  

Saving and Checking accounts are insured by the Federal Government--FDIC for banks and NCUA for credit unions. Banks and Credit Unions offer other kinds of accounts too, such as investments, safety deposit boxes, and credit cards. These are not insured by the FDIC or NCUA.