This article is part of our 52 week journey through Bill’s latest book, “The Graduate’s Guide to Life and Money.” Each week, a full excerpt from his book will be presented from beginning to end. To get your copy of his book, visit www.TheGraduatesGuide.com.
Last week discussed tips for ATMs and checks, including how to properly write a check. This week we will look at what it takes to keep your accounts balanced, which is essential for maintaining control of your money.
Once you begin using your checking account regularly, it becomes vital to know how much money is in your account. One purpose of keeping your checkbook balanced is to avoid bouncing checks (your account does not have enough to cover the amount on the check). Not only is this embarrassing, but you could run into real problems, such as having your car repossessed or losing your apartment, depending on the circumstances. At the very least your bank will charge a fee. One bounced check will not destroy you financially, but making a habit of it will. If you find you are having these problems, you really should keep a balanced checkbook.
The easiest way to balance your checkbook is to use a financial software program such as Quicken or moneyStrands. You could enter your receipts once per week. Then, every month, when you get your bank statement, you can enter anything you missed and keep your account balanced. The goal here is just to avoid running out of money before the end of the month. As an added benefit, most software programs also have a feature that allows you to see where you spend your money (such as 40% in housing, 10% in taxes, 25% on entertainment, etc.).
If this doesn’t sound like something you’ll stick with, you can choose a bank or credit union that has your account details online. You can browse your account every few days and see which checks have cleared and which ones have not. Since you bought the carbon checks, you can easily see how much is yet to come out of your account. Plus, this is the easiest way to keep track of your ATM or bankcard withdraws. They usually post within three or four business days, while most banks post your transactions real-time.
Whatever method you decide to use to handle your banking needs, keep in mind, there is a balance between time and cost. Don’t let complacency get the better of you and end up paying the highest fees which just make the bank a richer place. On the other hand, don’t cancel your weekend plans because you found the perfect bank, but you have to drive for three hours to get to it. If you find a moderate balance between convenience and cost, you won’t have to worry about your banking again for many years.
As you will learn from the other chapters that deal with professionals in the financial industry, banks exist to make money. While many of them try to help you with what they believe is in your best interest, they will usually only do so with what they have to offer. In other words, they may try to offer you the best loan program or the best checking account they have. However, another bank may actually offer a better program. Most banks are not going to tell you they do not have what you are looking for. You are expected to figure that out on your own. You have to go out and comparison-shop. Do not settle on a bank just because it is the one your parents used, or it is the one you used while you were in college. Your needs have changed, and you may find another bank, or even better, a credit union, that will more likely meet your needs at a lower cost.
Just because banks are larger and more impressive, doesn’t mean you should trust them. After all, whose money do you think helped pay for all those large and impressive buildings?
Before you move on to the next chapter, I have an assignment for you. Call or visit at least three banks or credit unions, even if you already have a bank. Compare their interest rates, their fees (late, overdraft, etc.) and their ATM policies. Also, compare how convenient they are for you, such as how close they are to your work and your home, or their banking hours (some banks close by three o’clock).
Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h and The Graduate’s Guide to Life and Money. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership, and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them. You can learn more at www.ExtraCreditBook.com or www.TheGraduatesGuide.com.