I have always subscribed to the "Pay Yourself First" mantra. The reason is because bills/expenses will always be a part of your life. You will always have someone or some entity asking for money. Whether it is family, utility company, car/insurance payments or charity, you will always have something to spend your money on. If you are always spending your money, you will never have any for future needs. The way this is achieved is by having deductions or direct deposits from a paycheck. This way money is automatically saved. It can't be spent if it is not easily accessible.

Now that you have established an automatic savings program, how much cash is enough? The normal rule of thumb is six months worth of expenses. Let's say you spend $1,500 per month on living expenses. This equates to $9,000 in savings.

• Which type of institution(s) would you choose to manage your cash savings? Why?
• $9,000 is a lot of money sitting in a bank savings account earning near zero percent interest. What cash alternatives would you consider?
• What is the difference between a bank account and an investment account? Say, 1st Bank & Charles Schwab. Why would you choose one over the other. Is there any benefit of using both?
• What is the difference between FDIC and SIPC insurnace? (You may need to search the internet for SIPC)