Utilizing the Banking System

Finding a bank that will best meet your needs depends, in large part, on your spending and saving habits—or the ones you’re trying to cultivate. The more you know about how you’re likely to use your accounts, the more effective your search can be. To get started, ask yourself these questions:

• How many bills do you typically pay each month, and how often do you with- draw cash at the ATM?
• Do you have enough cash available to meet a minimum balance requirement for a no-cost or interest-bearing checking account, and will you be able to keep that amount in your account?
• Do you need a bank that’s open nights and weekends?

It’s no secret that banks make
a lot of money from fees they charge retail clients. You may 
not mind paying the cost of optional services, like bank checks or wire transfers, if you need to use them. But there are fees you can—and should—avoid, either by choosing a bank that doesn’t charge them or doing your best not to incur them, since they can set you back $35 or more each time. They include overdraft fees, balance inquiry fees, low balance fees, extra check fees, and replacement statement fees, among others.

Most financial advisers suggest creating an emergency fund with three to six months’ worth of income. That way you’ll have some backup if you face a major financial emergency, such as getting sick or being laid off. An emergency fund should be liquid, which means the money is available as cash or can be converted to cash easily with little or no loss of value. CDs, US Treasury bills, and money market accounts are good choices.

Most people need some accounting of their money. By reviewing your monthly statements, you can keep tabs on your spending and check your math for accuracy.

Contributions from the book It’s Your Financial Life in this press release are used with permission from Light Bulb Press.