7 Smart Genius Intelligent Practical Places to Put Your Money After You Get Paid
Are you looking for ways to grow your savings and net worth? Do you want to become financially successful? If so, then you need to know where to put your money. In this article, we will go over seven smart, genius, intelligent, and practical places to put your money after you get paid. These are low to no-risk areas that can help you grow your savings and net worth.
Table of Contents
1. Necessities
2. Treasury Bills
3. High Yield Savings Account
4. Investing in Your Hobbies
5. Real Estate
6. Checking Account
7. Discretionary Spending
Necessities
The first place your money should go is to necessities. The 50/30/20 rule states that 50% of your money should go to necessities, 30% to wants, and 20% to savings. While we don't believe in this rule fully, it does make an important point. A good majority of your money is likely going to go into necessities, and that's actually a very smart place to put your money.
If you don't put your money into necessities, you may start buying things that you don't need, and your want section will increase. Everyone has necessities, such as housing, food, and services. You need to prioritize your necessities over other things like your wants. When the money hits your bank account, it's okay and totally normal for you to actually spend it on necessities.
The amount of money you spend on necessities can go up or down, and overall, you generally want to push towards having it go down by being more efficient with your housing, buying food that's on sale at the grocery store, and just trying to live below your means.
Treasury Bills
The second place to put your money is in treasury bills. A treasury bill is a short-term US Government debt obligation backed by the Treasury Department with a maturity of one year or less. They are usually sold in increments of $11,000.
The reason why we're such big fans of T-bills is that they are paying some insane interest rates right now. They are also one of the safest investments since they are backed by the US government. Personally, a lot of our money is in T-bills right now. We're seeing interest rates in the mid-5%, and if you do have some extra cash to invest, we think T-bills are an amazing thing to put your money into.
Another great thing about T-bills is that whatever money you're making, the profit is actually not subject to state or local income taxes. While the interest rates can be a little bit higher than high-yield savings accounts, the amount of take-home money you get after taxes can be quite significantly higher. It's actually very easy to buy T-bills. It sort of depends on what brokerage you use, but we do have some videos explaining how to do it.
High Yield Savings Account
The third place your money should go after getting your paycheck is a high-yield savings account. The main difference between a high-yield savings account and a normal savings account is that the interest rate is going to be a lot higher.
Personally, our favorite high-yield savings account right now is Sofi. They're paying like 4.6% APY, which is really, really good. Unfortunately, any money you make is subject to state and local taxes as well as federal taxes. That's why we tend to prefer treasury bills.
Investing in Your Hobbies
The fourth place to put your money is into your own hobbies. Investing in your own hobbies gives you a better life with way more fulfillment and allows you to build skills that you can eventually monetize through some type of side hustle or a business.
Most hobbies involve some type of skill, and the thing is that for most skills, there is a way to monetize. We recommend pairing your hobby with your own website or blog. It's a great way to have accountability and to actually show off your skills.
Real Estate
The fifth place to put your money is in real estate. Many of you may not have enough money to actually go out there and buy a whole house, but there are some pretty horrible ways to get into real estate investing without putting down a ton of cash.
For example, you can house hack, which basically means you buy a house and then rent out a bunch of the rooms to other people. This should effectively make your housing payment close to zero if done right. It allows you to build equity in the house and get appreciation in the house without having to shoulder a huge mortgage payment.
Checking Account
The sixth place to put your money is into a checking account. The reason why a checking account is important is that the money is immediately accessible, meaning you can swipe a debit card and you'll be good.
While we don't think that your entire emergency fund should be in your checking account, we do think having at least a few thousand within your checking account is appropriate. Of course, your money is not going to earn any interest unlike the high-yield savings account or treasury bills, but it does give some peace of mind knowing you can spend that money right away.
Discretionary Spending
The seventh and final place to put your money is into discretionary spending. These are your wants. There's no person out there who we would recommend never spending money on things that they actually want.
Life is actually pretty short, and there are so many things that are fun to do which are not necessities. You can't take your money with you, of course, and that's why we think everyone should at least portion off a little bit of their money to spend on things that are fun which don't really make financial sense.
Highlights
- Prioritize necessities over wants
- Treasury bills are a safe and smart investment
- High-yield savings accounts have higher interest rates
- Investing in your hobbies can lead to skill development and monetization
- Real estate investing can be done without putting down a ton of cash
- Checking accounts provide immediate accessibility to your money
- Discretionary spending is important for quality of life
FAQ
Q: What is the 50/30/20 rule?
A: The 50/30/20 rule states that 50% of your money should go to necessities, 30% to wants, and 20% to savings.
Q: What are treasury bills?
A: Treasury bills are short-term US Government debt obligations backed by the Treasury Department with a maturity of one year or less.
Q: What is a high-yield savings account?
A: A high-yield savings account is a savings account with a higher interest rate than a normal savings account.
Q: How can I invest in real estate without putting down a ton of cash?
A: You can house hack or invest in real estate crowdfunding or REITs.
Q: Why is investing in your hobbies important?
A: Investing in your hobbies can lead to skill development and monetization, as well as a better quality of life.
Resources:
- Monarch Money
- Vanguard
- Sofi
- Hostinger
