Part 1: Personal Finance 101 — Banking, Credit Score, Savings

  1. Banking, Credit Score, Savings
  2. Investing
  3. Debt, Budgeting, Giving


Checking and savings accounts

When you open up a bank account, you’ll usually get a checking and savings account. A checking account is for daily spending (you gain no interest on money in that account, but you can move money in and out unlimitedly). A savings account usually has a limit on how many times you can withdraw money each month (i.e. 5) but you earn interest on money in that account.

Credit Score

Debit cards and credit cards

Getting a credit card is often the easiest way for young people to build credit. Often, spending within your limits on a credit card is superior to spending within your limits on a debit card because 1) your credit card has many protections (i.e. if someone steals your credit card and uses it, the bank can claw it back for you but if someone uses your debit card, the money is often gone/ a pain to get back) and most importantly 2) using your credit card builds your credit score.


Two things: 1) having an emergency fund is critical and 2) as a young person, you probably underestimate how expensive the big expenses in life are.

Emergency fund

This is a fund that you can access at all times (I don’t invest mine), in case of emergencies such as job loss, health, or whenever life gets you down (i.e. car crash, broken laptop, phone in toilet, etc.) How much you should save in your emergency fund depends on many factors:

  • The less stable your income is, the more you may need in a dedicated emergency fund
  • The less stable your household is (i.e. one income vs. two), the more you may need to save
  • The less stable your health is, the more you may need to save

Saving for large expenses

As a young person myself, it takes a lot for me to wrap my mind around how expensive the big expenses of life are. In college, I thought saving for a $200 concert was crazy. But imagine trying to buy a (small shoe closet) in SF that costs $800 000.

  • $100k downpayment (20% down on a $500k house), if you save $20k a year, in 5 years you will have enough
  • The average wedding in the US costs $30k. So if you want to get married at 30, and are currently 25, and you and your SO will split the cost, you need to save $3k annually for the next 5 years
  • Let’s say you want to go to Europe next year and the average 2-week vacation is $4k. You’ll need to save $334 every month for the next 12 months to afford that
  • If you think you’ll need $900 for Christmas gifts, then you’ll need to save $75 a month



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