Tuesday, May 4, 2010

Setting up your Bank Accounts

I am so very excited to have my darling friend and 5000moms’ cofounder as a guest blogger today. I hope you enjoy her post as much as I did. Thanks Brenda–you are wonderful!

Money Management: Personal Finance #1

Hi! I’m Brenda Kenworthy, the 5000moms Training Director. As I thought of how I could bring my career knowledge into the world of 5000moms, it became very clear to me that sharing ideas about how to handle personal finance issues was a great place to start. Whether handling finances for corporations or paying those bills at home, many of the techniques and procedures can be helpful in both areas.

So I am going to start with the very beginning, Setting Up Your Bank Accounts. This may sound like a “no-brainer” and I bet most of you are thinking, “Okay, I already have a checking account, so what is Step 2?” Well, as a single mom putting myself through school, I discovered a very helpful technique to managing my money and I would love to share it with you.

First, I opened four bank accounts. Yep. Four. I opened these at a credit union where the accounts can be “connected”. I opened a “share” account which required me to maintain a $25 balance. I opened two checking accounts, one with a checkbook and one with a debit card. And finally I opened a savings account which could only be accessed by transferring funds to one of the checking accounts through a phone call or online. I did not make this savings account accessible to overdrafts from the checking accounts.

So, here is how I used them. Ready?

1. When I received grant or school loan money, I immediately deposited this into the savings account. Note that in addition to keeping this money protected from checking overdraft, I was also keeping it protected from fraud. My wallet was once stolen and thankfully my “big” money was never touched because I had no overdraft access or no debit/credit cards attached to that account.

2. My paycheck from my job was direct deposited in the checking account with the checkbook. This account was used to pay my bills. I always made sure I had enough money in that account to cover my bills. And I would only use it to pay my bills. Therefore, I never bounced a check due to those annoying debit charges that can be forgotten.

3. After calculating the amount of bills that needed to be paid for the month, and making sure there was enough to cover them in my checking with checkbook account, I transferred the remaining funds to my debit card checking account. This account was my “spending money”. I used this debit card to purchase all food, gas, clothes for my boys and I and any extra expenses that needed to be paid. This is a really safe way to go, because if there is not enough money in the account, the card simply will not work. No overdraft charges, no extra fees. I simply cannot buy what I wanted to buy. If you actually have more money than you have budgeted to spend for the month, by all means feel free to transfer the remaining funds into your savings account for a rainy day. We all know these come from time to time.

4. The fourth account was the initial account I was required to open and maintain a $25 balance. This account I could use when I had an upcoming expense which would require me to save over a short period of time, whether it be for vacation or Christmas or Disneyland. (I love Disneyland!) I would simply transfer the amount I had designated each month to this account from my “spending money” and it was always there when I needed it.

I promise you that by following this simple plan, you will save time, energy and stress with paying your bills and knowing there is enough to cover you through the end of the month or pay period. There is nothing better than knowing that everything is handled and no bills will go unpaid, in addition to allowing you to create a budget for yourself, simply by transferring only the money you need for the month into that debit checking account.

Please feel free to ask me any questions you may have and enjoy the peace that comes from managing you money. Have a wonderful week and I hope to hear from you!

Brenda
Brenda@5000moms.com

4 comments:

  1. Thank you Brenda!! I know this article will be so helpful to many people. Why we don't learn this stuff in high school is a mystery to me?!

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  2. I have read this several, several times Brenda and love it more each time. Everyone should know this info--I just wished I had learned it when I was young, like Nisha mentioned. Thanks for guest posting on the Home Essentials blog and for being such a fabulous friend!

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  3. Brenda,
    Thanks for your excellent money management articles. It is so important to be on top of it all. Saving money gives me a good feeling of security. Mary

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  4. Here is lots of useful information about basic bank accounts also you can directly apply for prepaid mastercard, credit cards and debit cards.

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