Are you having your first taste of independence? Maybe you've moved across the country to start over in a new city? Or perhaps you're off to college after living with your parents for nearly two decades?
You're responsible for purchasing your own meals, paying rent, and making sure that you have the necessities to get by in life. So how do you become financially responsible if you never had to be before? You can start by getting a bank account.
Checking and savings accounts
There are two standard types of bank accounts — checking and savings. Checking accounts give you better access to your money but offer little to no interest. Savings accounts typically have better interest rates but limit the number of monthly transactions.
When it comes to making your decision, consider going with the account that best meets your needs. If you're going to be paying regular bills, writing checks, and accessing the ATM for cash, you're going to need a checking account. If you're looking for a long-term way to hold on to your money, a savings account would be a better choice.
Whatever you decide, be sure to look at the fees and requirements of the account that you choose. Some financial institutions require a direct deposit or a minimum balance. You may also be charged for using a bank teller, ATM access, and using online banking functions.
When it comes to debit cards, keep in mind that even though they may have a credit card logo on them, they don't work the same way. With a debit card, purchases are being directly deducted from your bank account, so it's very important that you always keep track of your spending. If you don't have enough money in your account to cover your purchases, you could rack up a significant amount of overdraft fees and get yourself into a lot of trouble.
Keeping track of purchases
It's a good idea to keep an accurate record of debit purchases, ATM withdrawals, checks, and deposits. Also, make sure that you verify your transactions and keep your checkbook balanced using your check registry and bank statements. Monitor your account on a regular basis. This will make it easy for you to spot any discrepancies right away.
Balancing your checkbook may not be much fun, but it can save you a lot of trouble in the long run. It is also the number one tool in setting up a budget. Find out more about how to balance your checking account.
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