We’ve covered budgeting and saving as foundations of money management. Investing is another element: it means putting money into assets like stocks, bonds, or real estate to earn returns through capital gains, dividends, or interest.
Investing involves more risk than saving; your money is not federally insured, and you could lose the amount you deposited. That’s why, before investing, it’s crucial to have an emergency fund covering three to six months of expenses and to keep money for short-term needs—like a car or home down payment—safe and easily accessible in an insured bank or credit union account.
If you’re new to investing, consulting a qualified professional, such as a financial adviser, can help you build a strategy aligned with your goals. While investing carries greater risk than saving, it also offers the potential for larger long-term rewards.
Investment Products
The most common investment products are stocks, bonds, mutual funds, and exchange-traded products, often used for retirement or college savings. Other vehicles include real estate, precious metals, commodities, private equity, and cryptocurrencies.
Bonds are like IOUs commonly issued by governments, municipalities, or corporations to raise money. Investors who buy bonds lend money and receive interest over a specified period. Main types include corporate bonds, municipal bonds, and U.S. Treasuries securities.
Stocks represent ownership in a company, or “equity.” Stocks come in two main forms: common stock and preferred stock.
Mutual funds pool money from many investors and invest in a diversified mix of assets, such as stocks, bonds, and money market instruments. The overall mix is called the fund’s portfolio, and a professional adviser manages it. Exchange-traded products (ETPs), including exchange-traded funds (ETFs), combine aspects of mutual funds and conventional stocks.
Hedge funds are private, unregistered investment funds that use pooled investor money to pursue more flexible investments and strategies.
Commodities are basic goods and materials like precious metals, crude oil and natural gas, wheat, coffee, and livestock.
Cryptocurrencies, or crypto assets, are digital assets built on blockchain technology.
Always research the risks, fees, and suitability of any investment before committing your money.
Investment Accounts
Investment accounts are used to hold your assets and cash. The right type depends on your goals, risk tolerance, and ownership needs.
ABLE accounts, or 529A accounts (enabled by the 2014 Achieving a Better Life Experience Act), allow individuals with disabilities to save and invest with tax advantages, without risking eligibility for public benefits.
College Savings accounts, like 529 plans and Coverdell ESAs, help parents or guardians invest in education expenses. Similar to college savings accounts, custodial accounts, established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA), allow adults to invest for a child’s benefit.
Saving for retirement may be the most important financial goal you’ll ever pursue. Building a nest egg of enough funds that can support you for twenty years or more requires proactive planning, steady saving, and disciplined investing. Common retirement accounts include 401K, 403(b) and 457(b), and Individual Retirement Accounts (IRAs).
Most financial institutions offer at least standard brokerage accounts and IRAs, and some may also provide college savings accounts and custodial accounts.
Investment Management
Investment management is the professional oversight of your investment portfolio. This service, also known as asset management, can be provided in different ways. Traditional investment advisors offer personalized guidance, helping you build and maintain a portfolio tailored to your financial goals. Alternatively, a “robo-advisor” refers to an automated digital investment advisory program; it creates and manages a portfolio for you, based on your goals and risk tolerance after answering an online questionnaire, often at a lower cost.
Investment Scams
Investment scams promise quick, easy money with little to no risk, often through financial markets, cryptocurrency, real estate, or precious metals/coins. These scammers attract you with infomercials, social media posts, or online ads that encourage you to attend a free seminar/training, order free materials, or watch free introductory videos learning about the secret of getting rich quickly.
Investment training scams: Their “tested” or “secret” strategy will help you get rich and change your life, but these promises and so-called success stories are almost always fake or rare exceptions.
Real estate investment scams may advertise “world-class” properties with luxury amenities, but these properties often take years to materialize, are never built, or lack the promised features. Reselling the land may also be impossible due to a lack of buyers.
Real estate training scams market online or in-person programs by promising risk-free investments and quick profits with little effort or experience—claims that are rarely true and are designed to get you to pay for their courses.
Precious metals and coin scams often feature individuals posing as “metal dealers” or “rare coin merchants” who gain your trust, falsely claim expertise, and then fail to deliver on their promises, pocketing your money. Before investing in bullion, coins, or precious metals, review the Commodity Futures Trading Commission’s (CFTC) precious metals fraud alert and research the market carefully.
Cryptocurrency investment scammers often target victims via social media, texting, or dating apps, building trust through fake connections, then pitch fraudulent crypto investments. Cryptocurrency scammers will use fraudulent investment platforms and will often appear very lucrative, encouraging the victim to continue to invest; however, when they are ready to withdraw all their earnings, their account is usually “frozen” with “fees” needed to pay to unlock the funds. If you were a target of a cryptocurrency scam, you can file a complaint with the Internet Crime Complaint Center (IC3).
Red flags include guarantees of high returns, pressure to act fast, scarce investment details, or promises of wealth with little effort or risk. Always research independently before making decisions, resist pressure, and know the risks involved in investing. If you believe you have been a victim of fraud, report it to the Federal Trade Commission (FTC) or the U.S. Securities and Exchange Commission (SEC).
Investment Tools & Resources
There are many investing resources available, including apps, online tools, and real-life professionals. Some popular investment apps include:
No matter which resource you choose, always take time to research your options, understand the risks, and select tools that match your goals and level of experience.
In a previous blog, we explored budgeting as one of the elements of money management. But once you know where your money is going, the next step is making that money work for your future through saving.
Savings is the portion of your income set aside for future expenditures, whether it’s for emergencies, a down payment on a home, or retirement. In some cases, employers help with this through deferred compensation plans, which set aside part of your paycheck to be paid out later, often at retirement.
Most people have been told to follow the rule of saving 10–20% of their income, but that isn’t always realistic. Instead of getting discouraged, create a savings rule that works for your circumstances. Focus first on building your emergency fund and choose to save an amount—either a specific dollar figure or a percentage of your income—that feels manageable. The key is consistency. Even small, regular contributions add up over time and build the habit of saving. People who regularly track their expenses and savings often find themselves saving more, simply because they’re staying mindful and intentional about where their money goes.
Types of Saving Accounts
Save regularly toward your goals – it will add up quickly! Photo source: UF/IFAS Extension
Where should you keep your savings? The answer depends on your individual needs and the amount you have set aside. While piggy banks, jars, and other at-home containers can serve as temporary spots for small amounts, they aren’t secure for holding larger sums. Instead, consider moving your money to a depository like a bank, credit union, or another financial institution. These places not only offer services such as checking and savings accounts, loans, and investment options, but also keep your money safer: your funds can earn interest and are generally insured against loss from theft, fire, or other disasters—unlike the cash kept at home.
Keep in mind, not all savings accounts are the same. The right match(es) for you depend(s) on your financial goals, how easily you want to access your money, the interest rate, and any account fees or restrictions.
Traditional savings accounts are common, easy to open, and generally fee-free, but they tend to offer low interest rates. Most brick-and-mortar banks and credit unions offer traditional accounts, often paired with convenient mobile apps.
Student and kids’ savings accounts—available at many brick-and-mortar banks and credit unions—are specifically designed to help children, teens, and students (often up to age 25) build good financial habits, like budgeting and saving.
A Health Savings Account (HSA) is a specialized savings account you can use to save for qualified out-of-pocket medical expenses, offering both tax incentives and flexibility for healthcare needs.
High-yield savings accounts provide above-average interest rates (or APY). These are typically found at online banks, which can offer better rates and lower fees due to reduced operating costs. Some financial institutions also offer high-yield checking account options.
Money marketaccounts blend features of both checking and savings. They earn interest, but also let you make limited withdrawals or debit purchases each month, making them a flexible but somewhat restricted option.
Certificates of deposit (CDs) let you lock in your money for a fixed period, usually at a higher interest rate than standard savings. Early withdrawals are often penalized.
Cash management accounts are a middle ground between saving and investing. These interest-bearing accounts securely hold your money while you decide on your next investment move.
By choosing the right account(s) based on your financial goals, you can make your money work smarter, not just harder.
Savings Tools & Resources
Generally speaking, most savings apps are also built into budgeting apps—something we covered in a previous blog—or are included with investment apps, which we’ll explore in an upcoming post.
Money management refers to the process of overseeing and planning all aspects of your finances, including budgeting, saving, and investing. Effective money management helps you understand your current financial situation, set goals for the future, and make informed decisions to support your financial and overall well-being.
What’s a Budget?
Many people view budgeting, or “living on a budget,” as restrictive, but in reality, it is simply a tool that summarizes your income and expenses over a set period—often a month—to help you prioritize spending and achieve your goals. To start, calculate your total income from paychecks and any other sources (for example, child support, gifts, or public assistance). Then, list all your fixed costs (e.g., rent, insurance, property taxes, and occasional fees) and flexible expenses (e.g., groceries, transportation, and entertainment). By managing your flexible expenses wisely, you can ensure you have enough to cover your fixed obligations and also make progress toward your financial goals. Subtract total expenses from your income. If the result is negative, you are spending more than you earn and may need to adjust your budget. At the start of each budgeting period, set your plan, and at the end, review your spending and adjust as needed for the next period.
Budgeting Strategies
A budget isn’t one-size-fits-all, because everyone’s income, expenses, and priorities are different. Budgets should be tailored to your unique situation, which is why there are various strategies to choose from. Some of the most common strategies include the 50/30/20, Pay Yourself First, Zero-based, and Envelope budgets.
The 50/30/20 method divides your income into three categories: 50% for needs like housing, insurance, and groceries—things you can’t do without; 30% for wants such as dining out, subscriptions, or vacations; and 20% for savings to support future goals like building an emergency fund, buying a home, or saving for retirement. Debt reduction, such as paying minimum and additional payments for loans and credits, is placed in both the needs and savings categories.
Pay Yourself First sets savings as the first expense by setting aside a fixed amount or percentage of your income as soon as you are paid. Start by focusing on building your emergency fund until it covers three to six months of essential living expenses. Once that’s accomplished, you can direct savings toward other financial goals. Setting up separate accounts or vaults for each goal can make it easier to track your progress and stay organized.
Zero-Based Budget ensures that every dollar you earn is assigned a specific purpose—whether for expenses and savings—so that your income minus your expenses always equals zero.
Envelope Budget, sometimes called “cash stuffing,” involves dividing your funds into envelopes (physical or digital), each representing a spending category. When the money in an envelope runs out, you stop spending in that category until the next budgeting period.
Budgeting Tools & Resources
There are many budgeting resources available, including apps, online tools, and printable worksheets. While some are free, many charge a fee to use or require payment to unlock additional features such as detailed reports, automatic account syncing, or advanced goal-tracking tools. Popular free mobile applications include:
Some banks and credit unions also offer built-in budgeting tools—check if there are any fees. Free printable worksheets from organizations like the Federal Trade Commission’s budget worksheet and the UF/IFAS Extension Money Management Calendar are also available. Furthermore, some prefer to create their budgets or use templates in Google Sheets or Microsoft Excel.
Explore different tools and mobile application options. Consider your financial goals, resources, and preferred budgeting strategy before making a decision, especially if you are considering a paid service.
In today’s credit-centric economy, maintaining a healthy credit score is more crucial than ever. One of the most effective ways to ensure good credit health is by regularly reviewing your annual credit reports from all three major credit reporting agencies: Equifax, Experian, and TransUnion. This practice not only helps you stay informed about your financial status but also protects you from potential fraud and errors that could negatively impact your credit score.
Understanding Your Credit Report
A credit report is a detailed record of your credit history, including information about credit accounts, payment history, and any public records such as bankruptcies or liens. Each of the three major credit reporting agencies collects and maintains this information independently, which means that your credit report from Equifax may differ slightly from the one provided by Experian or TransUnion. By reviewing all three reports, you get a comprehensive view of your credit history and can identify any discrepancies or inaccuracies.
Detecting Errors and Fraud
Errors on credit reports are more common than is often thought. According to a study by the Federal Trade Commission, one in five consumers has an error on at least one of their credit reports. These errors can range from incorrect personal information to inaccurate account details or even accounts that do not belong to you. By reviewing your credit reports annually, you can spot these errors early and take steps to correct them before they cause significant damage to your credit score.
In addition to errors, reviewing your credit reports can help you detect signs of identity theft. If you notice unfamiliar accounts or inquiries on your report, it could be a sign that someone has stolen your personal information and is using it to open credit accounts in your name. Early detection is key to minimizing the damage caused by identity theft, and regularly checking your credit reports is one of the best ways to catch fraudulent activity quickly.
Improving Your Credit Score
Your credit score is a numerical representation of your creditworthiness, and it plays a significant role in your ability to obtain loans, credit cards, and even housing. By reviewing your credit reports, you can identify areas where you can improve your credit score. For example, you might notice that you have high credit card balances or a history of late payments. By addressing these issues, you can work towards improving your credit score over time.
Reviewing a copy of your credit report from each credit reporting agency at least once a year is a great way to discover errors that may negatively impact your credit worthiness. (Adobe Stock photo)
Taking Advantage of Free Reports
Under the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report from each of the three major credit reporting agencies every 12 months. In 2024, this changed to free weekly copies of your credit report from each agency. This means you can access your credit reports from Equifax, Experian, and TransUnion at no cost, giving you the opportunity to review your credit history without any financial burden. To obtain your free reports, you can visit AnnualCreditReport.com, the only authorized website for free credit reports. You will never be asked to pay for your credit report on this site. If you are, you are on the wrong site.
Reviewing your credit report from all three major credit reporting agencies is a vital step in maintaining your financial health. By staying informed about your credit history, detecting errors and fraud early, and taking steps to improve your credit score, you can ensure that you are in the best possible position to achieve your financial goals. Don’t wait until it’s too late—make reviewing your credit reports a regular part of your financial routine.
Tired of renting and thinking about buying a house? Not sure where to start? Let’s talk about some of the first steps in the path to homeownership.
Many people don’t realize that making the decision to buy a home and the process to buy one isn’t a one-size-fits-all step. There are many emotions and considerations that go into it. Here are some of the first questions to consider.
Do you have a budget or spending plan that you can live on?
Photo Credit: UF/IFAS Photo by Tyler Jones
Having a spending plan or budget that you can live on means that you’ve reviewed your income and expenses and either have a balanced budget or one with money left over. You may adjust that budget each month as expenses and/or income change but you don’t end the month in the negative. If you’re just getting started, try checking out our Money Management Calendar. It will take you through the six steps of building a spending plan and serve as a tool to help track your money each month. Knowing your financial situation before you begin the process to buy a home is important, as there are out-of-pocket costs that you’ll encounter when buying a home such as appraisal fees and closing costs, in addition to costs associated with homeownership, like maintenance, repairs, and insurance.
How does your credit report and credit score look?
Lenders use your credit score to help determine whether or not to approve you for a mortgage loan and, if approved, at what interest rate. The higher your credit score, typically, the lower your interest rate and the less you’ll pay for your home. Different loan programs may also have a minimum credit score requirement you’ll have to meet. Start by checking your credit report at the three different credit reporting agencies: Experian, Equifax, and TransUnion. Look for any errors or mistakes that could negatively impact your score. The three national credit reporting agencies permanently extended a program allowing individuals to check their credit report for FREE once a week at each agency. Visit AnnualCreditReport.com access the free copies of your credit reports. Improving your credit score can take time so starting early is helpful.
How much debt do you have?
Photo Credit: UF/IFAS Photo by Thomas Wright
Debt is another factor that lenders consider when you apply for a mortgage loan. Having too much debt can cause you to be turned down for a mortgage loan. The amount of debt you have can also significantly impact how much a lender is willing to lend you toward a home purchase. You can calculate your debt-to-income (DTI) ratio by dividing your total monthly debt payments by your total gross monthly income and multiplying it by 100 to convert it to a percentage. For total monthly debt payments, you should include any loans, credit card payments, child support, alimony, medical payments, and similar items. Do not include things like groceries, utilities, etc.
Each lender and loan program will have a different maximum limit, but many are in the range of 35-41% of your income going for debt repayment.
These are just a few of the initial questions to consider if you’re thinking about buying a home (and can be ones to think about even if you’re not!). Saving money, paying down debt, and repairing or raising your credit score all take time. Starting today can help you to be in a better position when you are ready to take the next step. If you want to learn more, UF/IFAS Extension offers classes for first-time homebuyers (returning buyers are welcome, too!) that go more in-depth for each of these questions and much more. Contact your local Extension office to find out about class schedules.
Resources:
My Florida Home Book: A Guide for First-Time Homebuyers in Florida, University of Florida/IFAS Extension
