A Beginners Journey Into Financial Security: In this video and in the article below, Zach Carter, a college student at Quinnipiac University, researches the best path to saving money, shifting his mindset away from rash purchases in an effort to spur financial growth and shares a beginners journey into financial security.

Article: A Beginners Journey Into Financial Security

By Zach Carter

As a college student, my mindset regarding money is strictly supplemental. In my convoluted mind, $20 is the equivalent of one Chipotle order: one double-chicken bowl, one side of chips and guacamole, and one small fountain soda. $100 is five orders. $1,000? Well, that’s a lot of calories. $3.50 equates to one medium iced coffee at Dunkin’. At Starbucks, it’s $5. And at my local coffee shop down the street from my Quinnipiac University campus in Hamden, Connecticut — it’s about $6.50 (yes, really). You get the gist, right? My system is flawed. There are no means present in which my money works for itself. Any earnings flow into my checking — not savings — account, where they sit, stagnant, waiting to be spent in increments of $3.50, $5, or $20. I don’t invest, I have no portfolio, heck, I don’t even have a savings account. After all, I study journalism and Spanish, not accounting (unlike my mom, sister or uncle did). I am the family outlier — a communications major surrounded by CPAs and HR representatives. Not to mention my younger brother who, while only a first-year, business-undecided major at The College of New Jersey, foresees a future in some area of financial studies. At Retirement Daily, it is customary that interns are gifted a small bonus by our generous editor Robert Powell, co-founder of FinStream.TV. The only catch is we must chronicle the steps of our journey and publish our findings to hopefully inspire somebody else to take the same leap of faith I’m taking right now. So, with an extra $250 in hand and a goal to bolster my financial preparedness, I knew it was time to set myself along the path to success. With the option to either invest or save, I opted for the latter. Not that my risk tolerance isn’t high, it just doesn’t sit right with me that I’m a 20-year-old journalist working for a financial publication and I don’t even have my own savings account. After all, who is going to take financial advice from a kid with no savings account?

Keeping tradition alive: I started, embarrassingly enough, with this question: Can I have a checking account and a savings account with two different banks? A simple Google search mopped up any doubts I might have had and I was quickly on my way to finding the best savings account to suite my needs. My current financial situation was laughable. Every dollar I had to my name sat in a TD Bank checking account. I did some preliminary research, but if I was going to do this right, I knew I had to seek out an expert opinion.

First steps: Speaking with Haley Ellis, a CFP® and CPFA with Allegiance Financial Group Advisory Services, based in North Carolina, I was quickly reassured that I had made the right decision. “Financial Planning 101 says you should have 3-6 months of living expenses in a savings account before you even start investing,” Ellis said. “Based on your age, too…building your savings is a priority.” At this point, I’m starting to feel confident that I am on the right track, but now that I know what my end destination is, I’m unsure about how to get there. There are many financial service companies that offer a wide variety of saving options, almost all of which I’m unfamiliar with. In an effort to refine my approach, I asked Ellis to enlighten me with a few important factors to prioritize during my search. “You want to make sure (the bank) is FDIC certified,” she said almost immediately. “That means the money in the account, up to $250,000, if for some reason (maybe) the bank went under (or) went out of business, the government would step in and make sure that you are reimbursed for your money.” Next, she explained how annual percentage yield, or APY, dictates how much you receive in return when your money accumulates interest. This number can range anywhere from 0.01%-5% and up, although it is rare to find a savings account that offers a 5% APY. Anywhere around 4% was the sweet spot, Ellis said.

Two banks for the price of one: My aforementioned checking account is registered with TD Bank. As I spoke with Ellis, and she explained how different banks offer accounts with a wide variety of percentage yield based on factors like the size of the bank, total business and business model, I felt discouraged. Because, as I looked into long-term, high-yield savings accounts with TD Bank, I realized I would fall well short of Ellis’ 4% ballpark. With a Signature Savings Account — TD’s high-yield offering — I would only receive 2% APY. This account operates on a tier-based system, with account minimums distinguishing the recipient’s return. In order to qualify for 4% return, I would have to deposit a minimum of $100,000 — an amount I most definitely do not have, barring I win the lottery before the publication of this article. I wanted to stick with the same bank, but I knew I would be doing a disservice to me and my goals by settling for a 2% yield. There are not any major downsides to opening accounts across multiple banks, aside from a few small notes Ellis made an emphasis to add. “You have more user names and passwords…and if you’re transferring money back and forth, it’s not always instant,” she said. “If it’s all within the same bank, usually the second you transfer it, it’s available. If it’s bank to bank, it may take a day or two for the funds to move and to settle.” But that was it. Those were the only major drawbacks, she said, of using multiple banks. As I considered the negatives, I realized they didn’t have too much of an impact on me. I don’t mind the extra security, and if it takes a couple days to transfer my money back and forth, so what? It’s a savings account, I’m not supposed to touch the money anyway!

Moment of truth: The time had come to make my selection. I felt pride in this moment. I had done the research, conducted the interviews, and made a conservative effort not to just blindly throw a dart at the board, picking the first account with a shiny return. Instead, I made an educated choice I could feel confident about in the long term. The winner of my savings sweepstakes? American Express.

A 4.35% APY. No monthly fees. No minimum balance required. Everything I was looking for and then some.

I had history with American Express, being a long-time beneficiary of a credit card my mom gave me and my siblings only to use in times of emergencies. She made the savings recommendation, and I thought it would be a good fit. I logged in, entered my information, and registered. It took all of 30 seconds. For security, I would have to mail some copies of government documents: My driver’s license, Social Security card, and a past bank statement. Until then, the account would be pending confirmation. I now had plenty of time to consider the next question on my ledger. How much money should I put in this account? “You want to always leave enough money in your checking to be able to pay your bills. If you have your credit card on autopay or your rent or things like that, you want to make sure that you have enough of a cushion in your checking to be able to cover those expenses that come right out of the checking account,” Ellis said. “But anything after that, you should really want to put in your savings.” By now, my pride has shifted to fear. It’s scary, almost, tucking money away to accrue interest. I’ve gotten so accustomed to having money readily available, even for my most outrageous purchases, but now I have to shift my mindset to spend less and save more.

Equilibrium: Part of my goal throughout this exercise was not only to build a better financial future, but to adjust my mindset around money and how it works. I spend too much and save too little — an unsustainable practice that, hopefully with the help of my new savings account, will change my mindset. “It’s all about balance, right? I think so often you can see these articles online where people sacrifice everything and don’t go outside and barely eat to save their money. And sure, that might work for them, but that’s not realistic, especially for a college student,” Ellis said. “So I think it’s (about) finding that balance and really understanding your budget. It doesn’t have to be a big complicated budget, but understanding, ‘This is how much money I have each month.'” She was right. Balance was key. It’s time to cut the Chipotle bowls and lose the Dunkin’ coffees, at least in moderation. Living sustainably means spending conservatively and saving responsibly. When planning for and living in retirement, every dollar counts. I think that’s something everybody can agree on.

About Zach Carter: Zach Carter is a student at Quinnipiac University, where he is studying to earn his degree in journalism with a minor in Spanish. Zach is a member of Quinnipiac’s accelerated dual-degree program, receiving his bachelor’s degree at the end of his third undergraduate year before working toward a master’s degree in his fourth year. Outside of his endeavors with Retirement Daily, Zach acts as the Online Editor for the Quinnipiac Bobcats Sports Network and a Staff Writer for the Quinnipiac Chronicle, where he works as a dedicated, passionate, and truthful journalist with a wide portfolio of published work.