Money Management

Why is Managing your Money Important?

Being able to manage your money means that you have the ability to understand and use basic financial skills in order to control your finances:

*you know where your money is and how much you have at any given time (bank accounts, investments, etc.)

*you know where your money is going (budgeting)

*you know-- long-term--how your money will be spent (student loans and/or other recurring payments)

The Bank and its Basic Accounts (keeping up with your money)

• Savings
• Checking
• Money market

1. A savings account gives you a place to literally save your money. You will generally not be able access it on a regular basis like you would with a checking account. This type of account accrues interest.

(Interest: the amount the bank ‘pays’ you to keep your money in their institution. Interest rates may vary depending on the institution—and the type of savings account you open-- but are usually around .05%; interest is accrued daily, but usually paid monthly. )

2. A Checking account will let you access your money any time you’d like, by using a debit card (a plastic card tied to your checking account, which ‘debits’—takes away-- the money you spend from the account on a daily basis), paper check, or withdrawal from the bank or an ATM. Checking accounts don’t typically earn interest, and if they do, it is an extremely small percentage. There are typically fees associated with checking accounts.

Common fees associated with checking accounts:

Maintenance fees--the client paying the bank for their services

Minimum balance fees--the bank charging for not maintaining the minimum balance for the account.

Overdraft fees--charged when there are insufficient funds in the account.

Overdraft protection fees—this is a service you can enroll in to protect yourself from overdraft fees. In instances where there will be a lack of funds in the account due to a debit or withdrawal, the bank advances money to your account in order to cover the balance so there are not insufficient funds, therefore no overdraft fee. However, on average, this service costs $32 per use, in conjunction with the amount of the purchase or withdrawal amount.

Non-network ATM fees--charged when you don’t use your institution’s ATMs.

3. A Money Market account is a sort of savings/checking combo where you can write a fixed number of checks per month from the account. The money kept in a Money Market account also earns higher interest than money kept in a savings or checking account.

Opening a checking and/or savings account:

The basics you will need in order to open a checking or savings account are: a couple of forms of I.d., including a government-issued identification card, your social security card, and an initial deposit. The amount of the initial deposit depends on the banking institution, but usually starts at about $25.00. After opening your account, you will get a monthly statement which is a breakdown of your account activity over the past month.