Managing Your Checking Account

Managing your checking account can be summarized into five simple steps. These steps are essential to master so that you can properly manage your household expenses and your budget as well.

The first step is to choose a bank that you like. Go to the various banks and credit unions and ask them about the different kinds of checking accounts that they offer to their clients. The most important question you might ask is about all the fees that go with the account such as the ATM fees, cost of check, monthly fees, overdraft protection and overdraft charge. You should also ask if the account in question would be available for online banking transactions. Free checking is always a good bonus but do not base your decision solely upon it.

The second step has to do with recording your transactions. It is a tedious and boring job but you really need to put all transactions into writing. Put down in writing every monetary transaction, all deposits and even ATM withdrawals. This process will help you keep accurate bank records.

The third step is to balance your checking account transactions every month. When you get your monthly statement from the bank, reconcile it with the data you input in your check register. When you do this, you can often find mistakes and most often it is your mistake. Sometimes it is a true banking error or it could even be fraudulent activity. It is always helpful to be able to find these mistakes and keep all your records straight. In case there are errors and discrepancies, contact the bank immediately in order to correct it as soon as possible. If you cannot go personally to the bank and you use the telephone instead, be ready to discuss the situation in detail to the service representative.

Documentation is the key to money management. It is the proof of all your financial transactions so it is essential that you keep a copy of them for your future reference. Not just any copy but you need a written records so print them out. Even your online banking transactions should be printed out. When it is time to throw your records out, shred the documents first for they contain vital information you would not want other people to have.

Step number four is to keep a close eye on all automatic payments and deposits so you can be assured of its accuracy. Even if the system is in automatic already, you should not assume anything. You should have a general idea of what your normal transactions look like so you can spot things that are out of the ordinary.

Step number five is to avoid a zero balance like the plague. Do not totally deplete your checking account. You should always keep a cushion of a few hundred dollars in your account so you can use this money as a hedge against emergencies and overdrafts. If you are smart, you’ll have set up an overdraft protection account so you don’t get charged excessive fees if you do make a mistake in your records that causes you to go below zero.

Following these five suggestions will help you on your way to good money management skills and help you live life more comfortably.

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Developing and Using a Budget

It might be very easy for you to make money but being careless in handling it might cause you to end up with nothing at all. What you need to do is write down a plan of  where and how your money will be spent. If you fail to do this, then you are inviting debt into your life and no one wants that. Here are some basic steps to budgeting your money.

You must know that the more basic your plan will be the better. When you make a list of planned expenses, the first thing to remember is to keep it very simple. You must list the typical things that you and your household needs to run smoothly. List your normal fixed expenses such as house or rent payments,  gas, electricity, water, telephone and any recurring bills.

List all money that will be coming into your account including your interest income, paychecks, child support, alimony and other costs. Doing this will help you become an effective budgeter.

After writing down the amount of money from all of your income sources, you must then identify your other expenses. This can be hard. You know why? Your expenses might change from month to month. You might have expenses you are not aware of. Create a miscellaneous category and try to guess what amount you will be spending.

You must have a good estimate of your monthly expenses  including the cost of gas, food, as well as utilities. The categories must include all areas where you typically spend money.  You will soon see where most of your money is being spent. Sometimes you will want to create sub-categories.

Some banks offer online services that automatically put your expenses in categories for you so you can easily see what you have spent your money on. This makes budgeting extremely easy.  In one glance you can see what you have spent on restaurants, which with the popularity of fast food and the great restaurants available now, make this one category that can be embarrassingly large. You can also set up categories that you most commonly use and customize your budget.

By budgeting and having your expenses written down somewhere or at least available to you online, you will be able to know where your money is going.  Analyze what you are spending for several months and it will soon become clear to you where you can cut back and how much money you can set aside for things you really want to have. Saving your money for doing something fun with your family or getting something you’ve always dreamed of is much easier when you have your budget planned and you set aside a certain amount of money every month.

Don’t stress out if you haven’t yet created a budget or you aren’t used to using one. You can always change your life by starting today to create a budget that will help you achieve your financial goals. You’ll be much happier in the long run and have much more satisfaction in being able to do the things you’ve always wanted to do.