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Category: Finances

Managing Your Finances and Your Future

One of the hardest things for many of us to do is to manage our finances properly. It can be hard if you’ve had no training and you’re used to just spending freely, whenever you want. There are thousands of people out there that can’t balance their checkbooks let alone plan for their future, but there is no shame in that. You just need to take that first step towards learning about how to start managing your finances and getting ready for the future.

For some, this may just not be possible, and again, there is no shame in that. If you simply cannot make sense of your money, you will need to get some help before you get into trouble. An accountant can really make a difference if you’re struggling and they usually do not cost that much money. You’ll actually be saving money in the long term and you’ll be able to spend less time worrying about your money.

But for most of us, it’s important to learn how to do this on our own. Unless you are incredibly bad at math, there is no reason that you cannot manage your finances. It’s really just basic addition and subtraction and anyone can do it. It takes a little bit of focus and you may need to learn a few terms along the way. However, you’re investing in your future when you learn how to manage your finances and it will pay off.

Let’s start off with basic financial planning. A lot of people hear that term and simply turn off. However, it’s actually pretty easy. Here’s an example – You need to ask yourself, how much money do I want to have saved five years from now. Now, divide that number by five. This is how much money you’re going to need to put aside every year to meet that goal.

If your goal isn’t reasonable, you may need to fine-tune it a little bit to bring it into line with your income. Now, you’ll need to take that yearly figure and divide it by twelve. This is the amount you’ll need to put aside every single month. Set up an interest-bearing savings account and make that deposit every single month. You may need to discipline yourself for the first few months, but it will get easier. If you find that your finances are a little tight, try revisiting a few of your expenses to free up some cash.

Lastly, it is important to understand how debt works. There is bad debt – which most of us are in, and then there is good debt. A simple formula to tell the difference is:

Bad debt = money spent on consumables and things that will never give you a return

Good debt = money spent on something that will create new income streams or pay off in the future. By using good debt, you can reach your savings goals a lot faster and it won’t be so difficult.

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Opening Bank Accounts: How to Choose a Bank and Open an Account in the US

Choosing a Bank Account

There are a dizzying number of banks out there, and they are not all the same. Taking time to choose the right bank account can be difficult, but it is worth the trouble. Here are some things to consider:

  • Convenience. It’s important that the bank be accessible, particularly for people who move or travel a lot. Features like online banking and direct deposit can help. Some people even prefer to have a fully online bank, while others want to know there is a bank branch they can actually walk into if they have any questions or concerns. Neither option is better than the other—it is an individual choice.
  • Minimum balance. “Free” checking accounts are very popular these days. Unfortunately, sometimes “free” really means something like “free is you keep at least $500 in your bank account every second of the month.” Before opening an account, people need to determine whether there is a minimum balance requirement, and what the fee is for going under the limit.
  • Service charges. All banks charge for certain things, like bouncing checks, even ones with “totally free checking”. But some banks charge for a lot of little things, like writing too many checks in one month or seeing a human teller. Checking accounts (as opposed to saving accounts) can be particularly costly. People should ask to see a schedule of fees before opening up any bank account.
  • ATMs. These little machines can be convenient, but they can also be expensive. Many banks charge for using another bank’s ATM, and the other bank charges as well. Each visit to an ATM can easily cost $3-5, which adds up over the course of a year. People who plan to use ATMs a lot should make sure their bank has free ATMs nearby or that the bank reimburses ATM expenses every month.
  • Credit Unions. Credit unions are non-profit cousins of banks. While credit unions sometimes offer fewer services than banks, they usually charge fewer fees and give out more interest. Not everyone can join a credit union; to open an account, people must be eligible for membership. Many large colleges, employers, and even cities have credit unions. People can also often join a parent’s or spouse’s credit union.

Opening a Bank Account

Once someone has selected a bank, opening up an account is easy. Bank accounts can usually be opened in person or online, though an online account might require that a signature be mailed to it. The requirements can change a bit from bank to bank, but basically people must:

  • Fill out and sign paperwork
  • Show government-issued identification (like a driver’s license)
  • Show proof of residency
  • Make an initial deposit (can be cash or check)
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