TAKE A DAY OF RECKONING
Many people find dealing with their finances daunting. They're not sure they're up to the task of managing of their money. So they pay a professional, or simply ignore the money realities of their life and hope for the best. While you can pay a professional to take care of some things for you-your taxes, for example-a true money manager or full-time financial planner may be beyond your means.
I firmly believe that you are the best person to manage your money. And I know you're capable of doing at least 95 percent of what needs to be done. But unless you streamline your financial life and make some smart choices early on, managing your money will be much more difficult and time-consuming.
Here's what you need to do. First, make sure your checking and money-market accounts are tied together so that you can transfer cash from the money-market account to your checking account by using the same ATM card. (Choose a bank with a large ATM network so you don't pay for each of these "transactions.")
Next, you'll want to choose a large financial services company that will be the central place you do business. You're looking for a company that offers brokerage accounts; a wide variety of well-respected mutual funds; and the ability to deposit cash electronically, use the Internet (reasonably cheaply) to trade online, search for information, and update your records. You want a company that's a known commodity and has a good reputation. Two good choices are Fidelity Investments and Charles Schwab, although there are others that meet this criteria.
The idea is to keep it simple. If you have multiple accounts at one financial institution, all of those accounts will be listed each month on a single statement. It will be far easier for you to keep track of your money because it will be in one place, not all over the map. By congregating your money in a single institution, you may also be able to take advantage of discounts available when your assets grow to reach certain levels.
For example, you might receive a discount on trading fees once you've accumulated a certain amount of assets at a financial institution, or you won't have to pay for funds kept in a retirement account. The institution might allow you to open a new account for a mutual fund with less than the minimum amount required, if you have significant assets invested elsewhere within the family of funds it operates. Keeping it simple will save you time and money.
