There’s not a large percentage of people who claim to have mastered personal finance. But—hopefully—those people will have mastered it by the time they retire. Actually, you should hope to master your finances well before you retire, or else you might not be able to retire at all.
If you want to enjoy your golden years without worrying about money, then you’ve got to save up enough money for retirement and you’ve also got to make your living expenses more manageable by paying down your debt. Of course, that’s all easier said than done. So let’s walk you through the necessary steps to master your personal finances before you retire.
Create the Right Blend of Savings Accounts
There are two main types of bank accounts: a checking account, which is for spending, and a savings account, which is for… well, saving. A lot of people make the mistake of using a single savings account to stash money for retirement, vacation, college funds, and rainy-day funds. But that’s not the best way to approach saving.
There are two problems with using a single savings account. First, it’s more difficult to figure out how much money you’ve actually saved for each of your saving items (“how much of my $10,000 is for retirement and how much is for my cruise next summer?”). Second, a standard savings account doesn’t yield a whole lot of interest. If your money is going to be sitting in the bank for years to come, you should have it in an account that generates higher interest.