Getting a bank account
Signing up for a bank account is the first step to financial security. Banks traditionally pay interest out to their members, and consumers can earn money off of their bank account balance. Banks can afford to do this because they lend out money and charge a higher interest rate to the holder of the loan. Interest payments are typically low, but if you have a great deal of money in the account, the interest can be very large.
Major banking institutions in the 21st century offer secure online banking. This can be incredibly convenient. Just login to the website from your home computer and bam - you have instant access to your balance, transaction history, settings, and more. The biggest concern most people have is whether or not it is safe to use online banking. Their concern is not mis-placed. Before connecting you should know whether or not your internet connection is secure and encrypted. You should not connect over an unsecured network. Second, you should be able to predict if your computer has malware or spyware on it. This can happen if you download computer programs from untrustworthy sites. It can also happen if you get a virus on your system from opening a bad email attachment or downloading a bad file. That's why it doesn't hurt to have an anti-virus scanner. Microsoft now typically provides a free security scanner for computers with the companies operating system. If you take reasonable precautions, you should be safe. If you feel uncomfortable with the risk, well you can always go in to the teller or use an atm only and avoid using online banking. In the 21st century it has proven to be secure enough for practical purposes.
More than just interest
Banks may pay interest to account holders, but investing in mutual funds can return greater amounts. Mutual funds are generally viewed to be a much safer place to put your money than individual stocks. Hedge fund managers are elite professionals with far more experience and talent than the average investor. The yields vary and depend on the investment strategy of the fund. Aggressive investing may have greater risk, but where there is risk there is often the potential for an extremely high pay off.
You can be a millionaire
Take this example: a fund that on average produces an annual return of 16%. If you were to start with a balance of $100, and every month you invested $600, you'd have $1,052,078.37 within 20 years. Is it hard to put away $600 a month? It can be, but it's not impossible. In a household where you and your spouse are both working, you can find a way to save $600 a month.
Example 2: You and your spouse manage to each contribute $300 a month to a mutual fund that on average returns a rate of 22%. Starting with just $100 in the account, within 20 years you're fund would be worth $2,582,996.28. So if you just had a baby, about by the time your kid goes to college, you'll be a multi-millionaire.
Credit card companies charge up to 33% interest on their cards. The annual interest rate a payday loan company gets can be up to 390%! This could be a nightmare scenario, and payday loans should only be taken out in case of emergencies or important occasions, and only if you know you can pay it back.
Invest wisely and you could be rich.