3 Bank Accounts Every 21-year-old Should Open

1. Checking Account

  • It’s nice to choose a bank that has a branch in your city, so you have someplace to go with questions or help with more complicated transactions. Or, in the case of online checking accounts, make sure they have good phone and/or chat customer service.
  • Pay attention to any fees. Some banks will charge you if you don’t have a certain amount of money in the bank or a minimum amount deposited each month.
  • Ask your friends and family which banks they use and why they like or dislike them. All banks are not created equal. Some have been scarred with a history of financial fraud and questionable security protocols in the past, so shop around.
  • Explore credit unions near you. Potential benefits of credit unions include lower interest rates on loans, higher interest rates on checking and saving accounts, and a more personal approach to banking.
  • I like Chase Checking because they have lots of branch locations in New York, and Schwab Checking because they allow account access at any non-Schwab ATM, like Chase or Bank of America or the bodega down the street.

2. Retirement Account

Chart showing compound interest over time
  • There are many different types of retirement accounts including 401(k)s, IRA’s, and Roth IRA’s, each with its own rules and tax implications. 401(k) is a type of account offered by an employer, while an IRA (Individual Retirement Account) is an account you can create and run individually, on your own, and is not connected to your employer. Do your research and speak with a financial advisor to make an informed decision.
  • When deciding how much to put into your retirement account each month, keep in mind that the purpose of this account is to put money in and not touch it until you retire. There are some specific scenarios in which you can withdraw money without massive tax penalties, but the intention behind the account is in its name. So, contribute what you can, while also being mindful of your other monthly bills and obligations.
  • I’m in a privileged position to have an employer that matches retirement contributions to my 401(k), so I did my research to learn how much is matched, and make sure to contribute that much each month. This way, I know I am using my retirement contributions in the most efficient way possible, and am optimizing every dollar.

3. Robo-Advisor Portfolio

  • Some robo-advisors have minimum requirements to open an account, generally ranging from $100 — $5,000. Some have no minimum requirements.
  • Some will charge you regular annual fees for their management services, while others have no annual fee. These services include making small adjustments to the software algorithm to, ideally, make smarter investment decisions based on the current state of the market.

Bonus Accounts

High Yield Savings Account

Online Stock Broker Account

Locked Safe In Your Closet or Under Your Bed

Great Resources to Learn More About Personal Finance:

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