At every stage of life, you'll have questions about your money and how to make the most of it. From improving your credit score to saving for a house and everything in between, making an informed choice today can make your tomorrow more secure and prosperous.
With this guide, you'll get answers to your most-asked financial questions quickly. You're just a few minutes away from learning how to make progress toward your financial goals.
How Do I Save More Money?
A budget can help you save money, but many people won't use one if it feels difficult, dull or restrictive. Here's how to make budgeting and saving easy and empowering.
First, play detective by tracking your income and expenses for 30 days—an app can save time here. Next, use the results to set up a budget that fits your goals and your daily routine. For example, if your month of tracking reveals you're spending more than you want on dining out, set a monthly ceiling. Then, before you order takeout, check your spending so you stay on budget.
You don't have to completely revamp your spending in one month. Use your tracking data to identify changes that feel easy, and implement them one at a time. This way, you'll boost your savings balance without feeling overwhelmed or deprived. Adding a "cheat day" category to your budget can also give you a little wiggle room for expenses during those extra-hard days.
Accelerate your progress by bucketing—automatically depositing money in separate accounts, each designated for a key goal. You'll save time and stay on track because once you've set up the automatic deposit, you don't have to do a thing.
How Do I Improve My Credit Score?
Improving your credit history and score can take time, but better credit can help you save money on mortgages, auto loans and even insurance. A few important steps you can take to improve your credit are:
- • Make on-time payments: A record of on-time payments can help your credit, and missing a payment or having accounts sent to collections can hurt it.
- • Don't max out credit cards: Try to use just a small portion of your available credit limits on revolving credit accounts, such as credit cards and lines of credit. The people with the best credit scores tend to have utilization ratios under 10%. For example, if their combined credit limits are $10,000, they'd have a combined credit card balance that's under $1,000. But you don't need to revolve a balance—that's a potentially costly myth. Try to pay the bill in full every month to avoid interest.
- • Use varying types of credit: Responsibly managing open installment loans and revolving credit accounts can help your credit scores. Having a good payment history with a specific type of loan, such as an auto loan, can also be important if you're applying for a new loan of the same type.
- • Have a long credit history: The age of your oldest and newest accounts—and the average age of all the accounts in your credit report—can affect your scores. Both open and closed accounts can count toward the average age of your accounts, which you can calculate by adding up the age of each account and dividing by the number of accounts. You can increase the average age of your accounts by (sparingly) opening new accounts.
- • Don't apply for new credit too often: Applying for new credit accounts can lead to a hard inquiry—when lenders thoroughly review your credit before making a decision. These can have small negative effects on your credit score.
- • Review your credit reports: Check your credit reports for errors that might be hurting your scores. You can dispute these errors with the creditors or credit bureaus.
Lenders can choose from different types of credit scores, which is why you might find that you have varying scores depending on where you check your score. However, most credit scores are based on the same underlying information in one of your credit reports. As a result, some of the basic actions—like making payments on time and using a small portion of your credit limits—can help all of your credit scores.
How Much Do I Need to Save for Retirement?
You don't have to spend hours crunching numbers to get a useful estimate of how much money you'll need to retire (but you can if you want to!). Start with two easy-to-remember rules: the 25x rule and the 4% rule. They're very similar math-wise, but each offers a different perspective on retirement saving and spending.
The 25x rule
The 25x rule gives you a baseline retirement savings goal. Simply:
- • Estimate your annual spending amount by multiplying the average of your monthly expenses by 12 and adding in less-frequent purchases, such as biannual insurance premiums and annual vehicle registration fees.
- • Multiply your annual spending by 25.
For example, if you spend about $42,000 a year, multiply that by 25 to get $1.05 million. Take that number and refine it based on your retirement lifestyle preferences and other factors.
The 4% rule
The 4% rule states that you can withdraw 4% of your retirement savings each year, and your portfolio could last about 30 years. You can use this rule once you retire and as part of your planning. For example, say you now spend about $4,500 a month, but you plan to spend $5,000 a month in retirement. That's $60,000 a year. Divide $60,000 by .04 to get $1.5 million. (Alternatively, multiply by 25 to get the same result.) You can use that as an investment goal.
How Do I Choose a Bank for My Savings Account?
First, look for a bank that's FDIC-insured, such as Riverstones Vista Capital , so your savings (up to $250,000, per account holder, ownership category, per FDIC-insured bank) are protected even if the bank fails. Though bank failures are rare, it's essential to protect yourself.
Next, you may want to find a bank that charges few fees and has little or no minimum balance requirements. Remember to seek out the most competitive interest rate for your money.
Once you've covered these bases, consider your needs. If, for example, you want convenience and higher interest rates, consider an online-only bank that offers cash access through ATMs.
Are Online Banks Safe?
As long as an online bank is FDIC-insured, your money is generally safe. Plus, with an online bank, you'll probably earn a higher interest rate than at a traditional bank. Whether you're banking online or using the online banking features of a branch-based bank, look for a few key security features and practice safe online habits.
For example, look for a bank, such as Riverstones Vista Capital , that lets you enable multifactor authentication. Ideally, you can use a second authentication method that isn't based on a text message, such as an authentication app or physical security key. Also, don't use public devices or networks to sign into your account, choose a strong password that you only use for that account and learn how to avoid phishing.
How Much Do I Need to Save for College?
Based on recent CollegeBoard data, the average price for tuition and fees for a full-time student range from $10,950 at a public four-year in-state school to $39,400 at a private nonprofit four-year school. And that's just for the 2022-2023 school year.
You can try to find projections for how much college will cost in the future, calculate how many years you have until your child starts college and then work backward to figure out how much to save. Starting to save for college early, even if it's just a little bit each month, can help. And you can put your money to work in a high yield savings account for a 529 plan.
Also, if you're looking at the list prices and experiencing extreme sticker shock, the good news is that you'll likely pay much less than the full price. Most undergraduate students receive grants or other types of financial aid that lower their total cost.
You can get an estimate of your actual cost by using the school's net price calculator. Federal law requires most U.S. colleges and universities to provide one on their website, or you can search for a school on the U.S. Department of Education's website.
How Do I Save for a House?
Wondering how you can save for a down payment? The budgeting and bucketing strategies described above are both key to saving for a house. But you'll also want to consider what type of mortgage to get and how large your down payment should be.
While putting 20% down can help you qualify for a lower interest rate or avoid extra costs, you may be able to qualify for a mortgage that requires a much lower (or no) down payment. The monthly costs, long-term costs, length of time you plan to live in the home and likelihood of refinancing the mortgage in the coming years can all influence which mortgage is best.
When choosing a place to park your savings in the interim, consider high yield savings accounts, money market accounts and certificates of deposit (CDs), which all offer returns without much risk.
How Do I Set Up a Savings Account for My Child?
You can open a savings account for your child as soon as they have a Social Security number. You have two options: a custodial account or a joint savings account. In either case, you'll need identification and an initial deposit.
With a custodial account, you will manage the account; your child won't be able to conduct any transactions without you. With a joint account, your child may be able to do more on their own, including using a debit card.
What Is a Good Age for Kids to Learn About Money?
You can start teaching your kids about money as early as age 3, as long as you consider what will make sense to them at that age. Before age 5, focus on concepts like delayed gratification and the value of work. Storybooks are especially helpful because they present essential ideas in relatable ways. You can even make learning about money into a game.
As kids grow, so does their capacity to learn about finances. To keep them engaged, make talking about money and saving a part of everyday life:
- • Point out prices while you're grocery shopping.
- • Provide an allowance and help your child manage it.
- • Open a joint savings account and involve your child in the process.
By the time your child is a teen, it's time to introduce how goal setting, part-time jobs and even credit can help them reach their own financial goals.
What Is the Best Way to Borrow Money?
Before borrowing a penny, be sure you understand key aspects of the loan—how much you'll need to repay each month, how that might change over time and how long you'll make payments. Also, understand what happens if you can't repay the loan. From there, try to find a loan or line of credit that suits your needs.
There are several broad categories of financing:
- • Installment loans, such as student loans and auto loans, give you money up front that you'll repay over a certain period.
- • Revolving accounts, such as credit cards and personal lines of credit, give you access to a line of credit that you can (but don't have to) borrow against multiple times.
There are also secured and unsecured credit accounts:
- • Secured loans may be easier to get and offer lower interest rates, but they also require collateral. For example, a mortgage and home equity line of credit are secured loans that use your home as collateral. The lender can foreclose on your home and take it if you don't repay the loan as agreed.
- • Unsecured loans, such as personal loans and credit cards, don't require collateral, but it can be harder to qualify for a low interest rate.
How Do I Finance a Big Purchase?
You can use different types of financing to make a big purchase. If you're buying a consumer product, using a personal loan, credit card or buy now, pay later (BNPL) plan might work for you. With credit cards and BNPL plans, you may even be able to finance the purchase without paying any fees or interest. But review the terms of the offer and financing closely.
For larger purchases, such as a vehicle or home, consider a secured loan that's specific to the type of purchase, such as an auto loan or mortgage. These tend to offer more favorable terms than you can get with an unsecured loan.
What's the Best Way to Invest My Money?
Every investment involves risk. When trying to choose investments, consider how much risk you're comfortable taking on, when you'll need the money and what you'll do if your investment drops in value.
If you're investing with a short time horizon (meaning you'll need the money soon), you generally want to look for safer investments. When you have a long time horizon, such as when you're young and saving for retirement, you might want to take on more risk with the prospect of getting a larger return over time.
Diversifying your investments by putting money into varying types of assets can help decrease some types of risk, but there's no way to eliminate every risk. When you're saving for a short-term goal or want to be sure you won't lose money, you can use interest-bearing savings options instead, such as high yield savings accounts and CDs.
How Can I Get Out of Debt?
Several approaches can help you get out of debt. First, you could try to cut back on other expenses—use your budget to find opportunities—or earn extra money that you can use to pay down debt. Debt payoff strategies, such as the avalanche or snowball methods, can help you determine which debts to focus on first.
Also, compare options to refinance or restructure your debts so you can pay them off sooner or pay less interest overall. For example, you might be able to use a personal loan or balance transfer credit card to pay off higher-interest debts. If your interest rate on the new account is lower, you can put the savings toward paying off your debt sooner.
You don't have to choose one option; combining several approaches could help you get out of debt sooner. Additionally, you might find that new options open up as you pay off your debts. For instance, paying down your credit cards might improve your credit score, which could help you qualify for a lower-rate personal loan that helps you finish off your remaining debt.
Is Renting or Buying a Home Better?
There are benefits and drawbacks to being a renter or a homeowner.
Renting is generally more hands-off. You don't have to worry about maintenance or repair costs, and you aren't responsible for some property-related expenses, such as property taxes. However, your landlord may be able to regularly raise your rent, impose restrictions or ask you to leave.
Buying a home might give you more freedom—you don't need to ask permission to paint a wall or personalize the space. You're also protected from rent increases, and your home's value may increase over time. However, you'll be responsible for all the costs associated with owning and maintaining the property, including property taxes that may increase over time.
There may be other considerations as well, such as how long you want to live in a certain area and how much space you'll need in the coming years. You can use a detailed rent or buy calculator to determine which option might make more sense financially.
How Can I Start a Savings Plan?
Creating a savings plan is similar to creating a budget in many ways. You'll want to track your income and expenses, and you might want to create different buckets for varying savings goals. But rather than budgeting all your money and saving what's left over, prioritize your savings.
For example, if you receive $2,000 on payday, first figure out how much needs to go toward your necessary expenses, then put money toward your savings goals, and only use what's left for your discretionary expenses. You can use our savings goal calculator to determine how long it will take to achieve your goal.
Automating these transfers into savings accounts might help you stay on track. However, as with every type of budget, you may need to make adjustments as you learn what's realistic for your situation.
Riverstones Vista Capital is Here to Help
Whether you're saving for a long-term goal or looking for a safe place to keep your money, Riverstones Vista Capital offers several types of high yield and tax-advantaged accounts. You can also learn more about various financial topics and get answers to your other questions in the Money Matters blog.
Louis DeNicola is a freelance finance writer who loves helping people and small businesses save money. He writes for financial services firms, publishers and tech companies, and lives in Oakland, CA.
READ MORE: 10 Questions to Help Accurately Calculate Your Retirement Numbers