Banking while you’re in high school and even university is usually simple and straight forward, no hidden fees or stress associated with trying to stay on top of your financial situation. It’s when you leave school and enter the working world for the first time post university that banking becomes more involved and expensive. When you first went to the bank in your teens you were probably offered a checking account for students that came with no hidden fees and no decisions to be made. Now that you’re in your 20s and have graduated you need to have a better understanding of the ins and outs of your bank account, both saving and checking.
Here are 5 important banking tips for the 20-something.
Be aware of the fees associated with your accounts.
Once you’re no longer eligible for a student account you need to start asking questions, this is the only way you can prepare yourself. Understanding exactly how your account works and knowing any fees that might exist, will allow you to avoid those fees and better utilize your account.
Remember that a bank is a business so they might not willingly tell you about fees because that’s how they make money off of your money, but if you ask they will explain everything you need to know.
Fees are typically less than $5 and most of the time even less than $1 so it can be easy to ignore them or simply not care. But once they start to add up you will see the different they make in your account balance. If you’re trying to stick to a budget to save money make sure you’re not wasting your hard earned cash on unnecessary banking fees.
Spend responsibly because your purchases are monitored.
When you use your debit card or credit card your purchases are monitored, analyzed and stored by your bank or credit card company. Banks like to see how responsible or irresponsible you are with your money, especially if you have a credit card with them or are applying for one.
This is less important when it comes to your debit card usage, as you’re spending the money you actually have, but if you want to apply for a credit card through your bank your spending habits can complicate the process.
Your bank could use the information they have on your spending habits to determine interest rates for your credit card. If you’re reckless with your own money your bank might want to offer you a higher than average interest rate, for their own protection.
Limit the transfers you make.
Do you know if your bank account includes transfer fees? If you don’t then you need to find out asap, you could be spending away your savings just by transferring your money from your savings to your checking account.
Your bank obviously wants your money to stay in their bank because they can make money off of your accounts and the transactions you make. If you need to transfer some money or you know you’ll need to in the future make a list or schedule your transfers so that you don’t throw away your hard earned savings.
There are lots of other special rules associated with transferring money so make sure you understand the ones that affect you, you don’t want to be unable to access your money.
Save as much as you can.
Yes, you’re in your 20s and fresh out of university and money is tight no matter how little you spend, but saving is so important.
Trying to think about the future and saving for emergencies is obviously not your top priority but accidents, injuries and emergencies happen so try to start saving as soon as possible.
Once you feel like you’re making enough money to trying start saving you need to be adamant about it, make a schedule and save a certain amount of every single paycheque you get. 10% is a great place to start but really any amount is better than nothing.
Double check your cheques.
When you make a purchase with your debit card or credit card it shows up immediately on your account, but when you write a cheque to pay for a bill or your rent it could take several days to show up on your account.
During those several days all your other purchases can start to add up and all of a sudden your rent cheque is bounded. It’s a serious pain to deal with a bounced cheque or a bank account that has a big overdraft.
If you pay for important things (like bills and rent) in advance with a cheque then you need to be careful with your spending and keep an eye on the balance of your bank account. Spending a lot of money on overdraft fees is not fun and not a useful way to spend your money.
Shifting from banking in your teens to banking in your 20s can sometimes be overwhelming but it doesn’t have to be if you educate yourself and understanding the fees and rules related to your accounts. Follow our top 5 banking tips for the 20-something and you won’t be spending your money on unless fees anymore.