Accounts

Checking

A checking account is used primarily for the holding of money. this is where it is common to have direct deposits sent to, write checks from, and use for regular transactions. 

Savings

A savings account is generally used to store saved money for a purchase in the near future. This account usually earns a low interest rate that is good for people with the intention to have a holding of money for a specific reason. 

Emergency Fund

While an emergency fund is not a specific type of account it holds a large amount of importance. This account should hold six months of income to be used for emergencies only. This account is not something to dip into to get food, go shopping, or spend for everyday reasons. The main reason of this account is if you were to lose your job for an extended period of time. You will be able to maintain your standard of living for six months without having to dip into other savings that you have. This is also to be used to sudden expensive costs such as a car breakdown, hot water heater breaking, or other large unexpected costs. After that cost is paid the account should be "paid back" so that you have a cushion if you ever need it. It is always better to have it and not need it than to need it and not have it. 

Roth IRA

An IRA otherwise known as an "Individual Retirement Plan" is a way to save for the future. In 2019 an individual can contribute up to $6,000 in a Roth IRA account. Contributions can be made until you are 70.5 years old, as long as you still have an income. Once you start to make qualified distributions after retirement, you do not have to pay taxes on the withdrawn funds. You are able to start the distribution of funds at 59.5 years old. 

401k and 403b

A 401k plan is one of the most common ways to save for retirement. Some employers have programs that will contribute to your 401k but this changes for each company. 

A 403b plan is very similar to a 401k plan except it is mainly used by nonprofit companies, religious groups, school districts, and government organizations.