Your savings should always work for you

Cash in the bank gives you the most comfort.

Knowing that you a significant amount of money waiting for you can give you a lot of freedom.

If I lost my job tomorrow, yes I am an employee for a business, I really would not mind. It would be a bummer and I would have to find another job, but it would not be the end of the world. This is not the case for a vast number of Americans. I recognize that. COVID-19 has destroyed the financial lives of many Americans.

The divide between the wealthiest and the poorest American is only going to get worse. The wealthy now have access to really low interest loan money they are going to use in smart ways to increase their financial position, meanwhile millions of Americans are struggling to get by.

I have no special insight into the future. I did not know that COVID-19 was going to happen, but I was prepared. I had already had already my apocalypse life moment and it prepared me for the times that we are in.

What exactly happened? I lost job, boyfriend, house and family members all within 2 months. And I did not have financial act together. It scared the shit out of me.

I had to learn about money fast. That was when I started saving and created my first emergency fund.

Then one day I had medical problems. Medical problems force you to look at your financial bills. Because once you visit the doctor, the bills really start coming to your door and they do not stop. My experience with our medical system could be an entire book, but that is another story. My medical problems lasted years and used up my first emergency fund. So I had to start again and build from zero. I have had to start from zero multiple times. But I am still here and this time I was prepared.

The most important lesson about money is this: Money creates more money.

This is why it is so easy for the wealth to become wealthier. They are not doing more work. They are using money more efficiently than you. There is something called an accredited investor. You qualify to be this person if you have a net worth of $1,000,000 or more. And these investors have access to financial products that the average citizen does not. Their money get special privileges. Being an accredited investor does not allows work out. During 2008 bad mortgage bundles destroyed a lot of wealth. But in general these investors make money.

But lets get back to you and your savings.

First you need to get out of debt. Debt is the opposite of savings. It is sucking the life out of you and giving it to credit businesses. It all comes down to interest. Debt means that you are giving away money for something else. That is not always bad. If you give away money to get something that gives you more money back, that spend was a good investment. This is the entire line of thinking in: Rich Dad, Poor Dad. You can use credit to your advantage. But the vast majority of debt is bad debt, consumer debt. You borrow money, the bank charges you an interest rate and you pay the money back over time.

My parents just paid off a 30year mortgage. And they basically paid double the house price, because of the interest on the loan over the 30 years. What a waste. They definitely could use that extra $100,000 or whatever right now in their golden years.

Your mission should be pay off all your consumer debt as quickly as possible. Even if you only pay 3% interest on your student loans or a car loan, that interest is still draining your investment gains. That money is not working for you, it is working against you.

I get it though. Mortgage debt is a big one. Homes are expensive and getting more expenses all the time, especially in big cities like NYC, LA, Seattle. Forget San Francisco the prices are crazy.

There are lots of ways to pay down your mortgage debt faster.

  • Pay more than the minimum each month
  • Make an extra payment each year. 13 instead of `12

The savings will be incredible and well worth it.

Your money should always be working you, instead of against you.

Money is always moving, wether you know if or not.

If money is sitting in the bank, everyday the value gets a little bit less due to inflation.

It is also earning interest. Even money in a checking account earns interest. Even if that interest is a tiny fraction, it still counts. If that money is in a savings account that interest amount is a little bit higher.

If your money is the market it is being used by a business to increase the revenue of the business.

You are also earning and spending the money in your account. Old money goes out, new money comes in.

I had to learn how to make money work for me. I had no idea what the hell I was doing in the beginning. If I am supposed to invest in the stock market which stocks am I supposed to buy?

But I do not consider stocks savings those are investments.

At first I started building up my Wells Fargo checking account, because that is the account I opened when I went to college. They I started researching savings accounts. Pretty much every bank offers savings accounts, but they are not all equal.

Do not open a savings account with a traditional bank unless they offer you a significant interest rate. Big bands do not really need you, that is why Wells Fargo created millions of fake accounts, because they did not really value the average American consumer. They just wanted you in their bank so that you would not be banking with their competitor. So they offer a terrible savings interest rate.

Local banks, credit unions and online banks are a better options for making your money work for you.

I recommend these banks for a good savings interest rate:

FYI: These places are not paying me, these are just the accounts that I have tried and have worked well for me.

It is good to have a savings account, but it is better to understand the concept of your money working for you.

When you make any investment: stocks, bonds, college a car; think about the return on investment. How is that money working for you? What is that return on invest?

Is your college education going to pay off through a higher salary and how long will it take to that education to pay for itself?

Is your savings growing every month? It should be. Even if that is just by $5

Why does it matter?

Impact. The more money you have and can generate the bigger life impact you will have. You can live a better lifestyle, you can support your family or you can give money away to causes you believe in and make those grow.

Stop thinking of money as currency and start viewing money as a vehicle.

Money compounds. Your money earns interest and that interest earns interest.

With money you can buy assets. And those assets can purchase other assets.

Money can also buy you credit.

The more money you have in the bank the more credit a bank will give you. You just have to be able to make the payment on that debt. And if you are smart you will take that credit and purchase more assets generating cash that allows you to borrow more credit.

Do not spend your money on crap. We all have enough crap in our lives. I am sitting here writing this look at a bookshelf of crap that I do not need, but have not cleaned out.

Be smarter than everyone else. Make sure your money is always working for you rather than for someone else.

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