Key Takeaways
- Keeping extra cash in checking earns little or no interest, so moving it to a high-yield savings account can be an easy first win.
- Building an emergency fund in a separate high-yield account gives you a buffer for life’s surprises without derailing your day-to-day budget.
- Starting small with retirement contributions—and increasing gradually over time—can help you build long-term security without strain.
Money questions can feel stressful when you’re earning a decent income but aren’t sure how to make the most of it. That uncertainty showed up in a recent Reddit post from a young professional trying to figure out the basics of getting started.
“I’m 30, make about $90,000–$100,000 a year. I have around $33,000 in my checking account. I do not have a savings account and have not opened any retirement accounts yet. What should I do with my money? What type of retirement account should I open? How much should I put in to start? Who should I open a savings account with? I’m pretty much financially illiterate.”
It’s a situation that’s more common than it might seem: steady income, some cash saved, but not much clarity on what the next steps are—or even what the available tools and options look like. The good news is that getting started doesn’t require expert-level knowledge. A few straightforward moves can create a foundation that’s easy to build on.
Why This Matters
Feeling unsure about money is common, but the path forward doesn’t have to be complicated. Once you understand where your cash should sit and how to take the first steps toward retirement saving, it becomes much easier to make decisions that support your future.
Move Your Extra Cash Into a High-Yield Savings Account
A checking account works well for paying rent, covering groceries, and handling everyday spending, but it’s a poor place for holding large balances. That’s because most checking accounts pay zero interest, which becomes even more costly once you factor in inflation. When prices rise but your checking balance earns nothing, the real value of your money shrinks over time.
That’s why keeping far more in checking than you need for monthly bills—like the $33,000 this Redditor holds—quietly works against you. A better approach is to leave only what you typically spend in a month, plus a small cushion to handle surprises, in your checking account. Then move the rest into a high-yield savings account that actually earns something.
How Much Extra Interest You Could Earn
If you moved $25,000 from checking into a savings account paying 4%, you’d collect about $83 in in interest per month—or roughly $1,000 a year—just for keeping it in a high-yield account.
Opening a high-yield savings account is straightforward, even if you’ve never had a savings account before. Most of the top-paying options are accounts from online banks, which are typically free to open, offer easy transfers to and from your checking account, and provide the same federal deposit insurance as traditional banks.
With hundreds of high-yield savings accounts available, sorting through them can feel overwhelming. But we round up the best high-yield savings accounts each day, highlighting the top nationwide APYs and key account features so you can quickly compare your options.
Build an Emergency Fund You Can Rely On
After moving extra cash out of checking, the next step is deciding how much of it should become your emergency fund. This is money reserved for true surprises—car repairs, medical bills, or a sudden loss of income—so you’re not forced to take on credit card debt when expenses spike.
A common guideline is three to six months of essential expenses if your income is steady. If your earnings vary or you prefer more cushion, aiming for six to twelve months can offer added stability. The goal isn’t precision; it’s having enough set aside to handle a period of financial uncertainty.
It also helps to keep your emergency fund separate from your immediate cash reserve. A small cash buffer can help cover minor unexpected expenses so your checking account stays protected. Your emergency fund is for bigger disruptions. Keeping them in different high-yield savings accounts makes it easy to see what’s available for day-to-day flexibility versus true emergencies.
Open a Retirement Account and Begin With Small, Consistent Contributions
Once your short-term finances are in order, the next step is to start saving for retirement. The first question is whether you have access to a 401(k) or similar workplace plan. If you do, that’s usually the easiest place to begin, especially if your employer offers a match. A match is essentially free money, and even a small contribution—like 3% to 5% of your pay—can get you started without straining your budget.
Smart Ways to Gradually Build Retirement Savings
If your employer offers a 401(k) match, it’s worth trying to contribute enough to receive the full amount—even if that feels like a stretch at first. And whatever level you begin with, consider increasing your contribution by 1% each year until you reach 10% or more. Small, steady increases can make a meaningful difference over time.
If you don’t have a workplace plan, the simplest alternative is to open an individual retirement account (IRA). Many beginners choose a Roth IRA because you contribute with after-tax money but can withdraw money tax-free in retirement. But a traditional IRA can also make sense, giving you a tax deduction now, but then taxing your withdrawals in retirement. With either type, you can start with modest amounts and build up over time.
Because investing can feel intimidating at first, make the goal manageable: Open the account, automate a small monthly contribution (whether that’s from your paycheck for a 401(k) or from your bank account for an IRA), and choose a broadly diversified target-date fund or index fund to get going. You can always adjust later as your income, confidence, and savings habits grow.
Have Debt? Tackle High-Interest Balances First
Once your short-term savings are set, take a moment to see whether you have any high-interest debt. Even a small credit card balance can grow quickly since card interest rates typically run into the teens or higher.
If you do have high-interest debt, putting extra money toward the balance with the highest rate can save you meaningful interest while you make minimum payments on the rest. After that balance is gone, you can move to the next one or redirect that freed-up cash toward retirement and savings.
Lower-interest debt—such as federal student loans—doesn’t require the same urgency. Many people continue saving for retirement while paying those on a normal schedule. The key is identifying which debts are actively working against you and addressing those first.
Should You Pay Off Debt or Save for Retirement First?
It’s a common question. If your debt carries a high interest rate, it often makes sense to put extra money toward paying it down while still contributing a small amount to retirement—especially if you receive an employer match. For lower-interest debt, many people feel comfortable saving for retirement and paying the loan on its regular schedule.
Build a Simple Money System You Can Stick With
Once the basics are in place, the goal is to create a system that keeps your finances steady without requiring constant attention. Automating your monthly retirement contribution and any transfers to savings removes the guesswork and helps you stay consistent.
It also helps to check in on your accounts a few times a year—adjusting your savings rate after a raise, revisiting your budget if expenses change, or refining your investments as you grow more comfortable. These quick check-ins keep your setup aligned with your goals.
A simple system makes it easier to maintain progress and adapt as your income, needs, and confidence grow.