These 6 Financial Accounts Build Wealth, According to Money Expert Rachel Cruze

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When building wealth, you shouldn’t just keep all your money in one type of account. In addition to offering different potential returns, some financial accounts come with tax perks or convenient features that simplify managing your money. The financial expert Rachel Cruze highlighted these six financial accounts and their benefits in a YouTube video.

1. Savings or Money Market Account

Having an account to grow your savings and make limited transactions is crucial simply. While a regular savings account can work, Cruze explained that a money market account can offer some advantages, including a better interest rate and check-writing privileges. You might want separate accounts for different goals. Cruze mentioned that she has an emergency fund money market account and another for upcoming purchases. 

2. Checking Account

Since you’ll ideally keep your hands off your savings, you should get a checking account for the money you’ll spend. Cruze said this account is especially useful since you’ll have a debit card for purchases and a place for your paycheck deposits. While you’ll find options at most credit unions and banks, Cruze prefers smaller local institutions. 

3. Retirement Account

A large portion of your savings will likely be for your retirement. Employer-sponsored accounts such as a 401(k) can be great for a high annual limit and potential matches, but you can also get an IRA. While traditional versions of these retirement accounts use pre-tax money and suit deferring income taxes, Cruze preferred Roth accounts for tax-free growth. Just watch out for any income limits for qualifying.

4. College Savings Account

You might want a college savings account so your children can benefit from tax-free growth while you save for college expenses. Cruze explained that you could pick an educational savings account with a low annual contribution limit or a more flexible 529 plan. Be sure to speak with an advisor and pick the account type carefully. Cruze wasn’t a fan of 529s for prepaid tuition or specific to one state.

5. Sinking Fund

It’s a good idea to consider your upcoming big purchases and gradually save for them each month. Cruze suggested having a savings account reserved for your sinking fund. That way, it will be easier to track your savings progress and not spend the cash by mistake.

6. Business Account 

Cruze said, “So if you have your own business, I really recommend keeping those things separate to keep it clean for tax purposes and also just to keep track of what’s going on.” You can do this with a business checking account to receive payments and cover your business expenses. This could be a good move, even for a small side gig.

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