It seems every time one gets into a discussion with regard to "personal finance" and how to go about developing a "financial plan," the "financial advisor" always starts with the usual pyramid, with emergency funds as the foundation.
Most advisors seem to suggest that one needs to have enough cash to survive for six months if one loses one's income, or something to that effect. You know what I'm talking about.
The problem, like everything else, everyone is different.
Unmarried college kids who are being supported by their parents, who have a very good relationship with their parents (and grandparents), and whose parents/grandparents are financially well off don't need emergency funds.
Their parents need emergency funds. Their grandparents have additional funds.
But even for their parents, I don't like the phrase "emergency funds." That suggests a pool of money that is sitting idly in some "savings account" earning no interest, or dividends, or capital appreciation.
For me, I prefer the "easy access to capital." In some cases, that may mean access to capital via loans or grants or gifts, but the bottom line, is that the foundation of one's financial plan, is "access to capital."
For the breadwinner of a family that foundation, or bottom later of the pyramid, would be "emergency funds."
But again, for college kids that don't need emergency money but do need quick, easy access to money, I suggest "parking money" in a Schwab account for easy access.
Where does one "park money" or where does one "place money" that is easily accessible that may not be included in "everyday expenses," like a car accident, or losing one's job, or being given an unexpected opportunity for that trip overseas one has always wanted.
Where do you park that money?
Assuming you have a Schwab account -- which for me is a no-brainer -- you park your money in an ETF and you have a Schwab checking account.
Use this prompt (or something similar) to ask Google: how does one go about opening a Schwab account; what should be part of the Schwab account; a cash account; a brokerage accout; a retirement account; etc. Walk me through the steps (with Schwab preferably, but any similar discount broker).
So, stepwise:
1. Go online to Schwab. Fill out an application, the site will probably start with, "so let's get started."
2. Complete an online application (taking about 10 minutes) with your SSN, driver’s license, and employer info.
3. Key accounts to open:
- a Schwab One® Brokerage Account for investing; and,
- a Schwab Bank High Yield Investor Checking® account for cash management.
At the same time, you can set up a Schwab retirement account or do that later. But it will take a bit more time and I would do that later. Get the account opened first to see how it works.
That's all you need to get started. There are no minimum opening deposits.
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Take A Breather
Once you have the account opened -- Schwab will send you a confirmation, an account number for the brokerage account and the checking account.
You can then electronically deposit a personal check into the brokerage account (which will load as "cash") and a personal check into the checking account.
From that point, you can simply move money back and forth between the checking account and the brokerage account.
REVIEW: components of a Comprehensive Schwab Setup (account) --
- Schwab One® Brokerage Account:
- The main account used to buy stocks, bonds, ETFs, and mutual funds. It is taxable, meaning you pay taxes on gains/dividends.
- Schwab Bank High Yield Investor Checking:
- A brokerage-linked checking account offering unlimited ATM fee rebates worldwide, high interest, and no monthly fees.
- Retirement Account (IRA):
- You can open a Roth or Traditional IRA for tax-advantaged retirement savings at the same time or you can wait until later.
Never, never, never open a traditional IRA; always open Roth IRAs. (Plural: you can have as many Roth IRAs as you want, but the total contributed to all Roth IRAs in any single year cannot exceed the Federal maximum. In 2026, that maximum is $7,500.)
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Okay, That's It -- Take A Breather
Wait for the confirmation information from Schwab.
Once you have that account information (for two accounts -- the brokerage [investing] account and the checking account: write two checks, one check for each account for $100 each and electronically deposit each check one at a time into each of the two accounts. This is to give you practice and to see if it works.
The checks will be deposited immediately and you can check later (same day; 24 hours later) to see that the deposit took place.
If everything works successfully, then deposit $5,000 into your brokerage (investing) account.
Once you receive confirmation that the $5,000 is in your brokerage (investing) account, then you take the next big step. Wait one or two days to make sure the $5,000-check has cleared and is in your Schwab account.
So, a couple of days later,
BUY an ETF.Process:
- Trade: go to the top of the page and look for the word "trade."
- Click on "trade."
- type in SCHB in the equity to be bought;
- type in BUY;
- type in $1,000;
- review and submit.
Two days later or at your convenience, look to see what your Schwab account looks like. It should look like this:
- in your brokerage (investing) account
- SCHB: $1,000
- Cash: $4,000
- in your checking account:
- Cash: $0.00
Now, just for the practice, transfer $1,000 of the cash in the brokerage account and "transfer" it to your checking account. It might take a little while to figure out how to do that depending on whether you are using your laptop or a mobile device.
But the key word you are looking for is TRANSFER.
Once you find that page, it's easy. Use the drop down menu, transfer from your brokerage account (the one with $4,000 in cash) to your checking account, $1,000 which you type in.
Review and submit the transfer. It may take as many as two clicks to confirm; Schwab gives you a chance to correct mistakes. But if you did it correctly, the transfer will happen instantly.
And that's it.
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Checks
You will receive checks in the mail in a couple of weeks from Schwab and you can then write checks. Just make sure you successively transferred that $1,000 into your Schwab account.
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Advice Regarding Checks
I use Schwab checks only for major purposes. I don't think I used my Schwab checking account for months after I opened the account, and I will use Schwab checks very, very infrequently.
Use the local banking / checking account you used before you opened a Schwab account.
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Emergency Funds / Access To Unexpected Need For Cash
Over time, gradually (or all at once), go to your brokerage account and buy as much SCHB as you can. From the steps above, you should still have $4,000 in cash in your brokerage account.
With that $4,000, buy $2,000 worth of SCHB and transfer $1,000 of that cash to your checking account.
Process:
- trade
- in your brokerage account, click on trade
- type in SCHB
- type in BUY
- type in $2,000 (that $2,000 will come out of cash from that same account)
- submit.
- transfer
- in your brokerage account find the page for "transfer"
- click on transfer
- type in transferring from brokerage account
- type in transferring to checking account (you might have to check a couple of agreement boxes)
- type in $1,000
- submit.
You will now have:
- Brokerage account:
- SCHB: $3000 in value; number of share depend on price at time you bought
- Cash: $1000 + the original $100
- Checking account:
- $1000 + the original $100
You should have the hang of it by now. If now, give me a call.
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