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Personal Finance 101 Part 5: Checking vs Savings 467 Views


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Transcript

00:01

We speak student!

00:05

Personal Finance 101

00:08

Checking Account versus Savings Account

00:11

a la Shmoop

00:13

Let's bring it back to some practical advice for students.

00:17

So is your advice to kind of totally bypass

00:20

the checking account and just invest it?

00:22

Well, it depends.

00:24

So you need a checking account.

00:27

You have to pay your bills somehow.

00:30

[ squawk ]

00:31

The question is how much you need to keep in a checking account.

00:35

And historically, keeping a lot of money in a checking account is really inefficient.

00:39

[ say what?! ]

00:41

And you just put it in the minimum that you need to pay off your bills.

00:45

And everything else, generally speaking, you probably want to invest.

00:49

And, yes, there's risk in the stock market,

00:51

[ manic giggle ]

00:52

but over the last 127 years,

00:56

the market's gone up on average ten percent a year.

01:00

So, yeah, it may go down

01:01

25 percent in a year,

01:03

but you're 16. Who cares?

01:07

It's gonna come back and you keep investing,

01:10

and if you're disciplined and you invest every month,

01:13

when the market's sold off

01:14

and you're still investing your hundred bucks a month,

01:16

you've bought a lot more shares for that hundred bucks

01:18

than you did when the market was expensive.

01:20

And then when it comes back, boy, you've made a killing.

01:23

[ woo-hoo! ]

01:26

[ whoop ]

01:27

Should I bypass a checking account and just invest my money?

01:33

[ manic giggle ]

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