For many people, budgeting isn’t a walk in the park. According to GoBankingRates, out of 7,000 Americans surveyed, about 69% of people said they couldn’t provide $1000 in case of an emergency. Not only that, but about 34% of the surveyed group said they didn’t have anything saved up at all! While earning a six-figure income is admirable, even recent college grads making below $50K a year can be financially prepared if they budget within their means. The key is to have healthy spending habits and proper financial tools, a useful one being a checking account. So, exactly how can a checking account help with budgeting? If you’re curious, continue reading.
Bill Maintenance
Let’s face it: keeping track of bills can be pretty overwhelming. Even an unmarried person without children still has to manage several bills each month: rent or mortgage, utilities, cell phone, health insurance, auto expenses, a credit card, and so on. One can easily forget to make a payment or get behind on bill management. Many checking accounts, such as those of Ally Bank, provide bill payment services. With these options, account holders can set up one-time or recurring payments to their desired company directly from their checking account, even via mobile app. Another option is to link their checking account to a digital wallet, such as Zelle or Apple Pay, to pay bills online. To help keep track of payment deadlines, account holders can set and receive ‘e-Bill’ reminders directly to their email or online account.
Emergency Fund
If there’s one thing to remember about insurance, it’s that there are exceptions to what a policy will cover. Health insurance, for example, may require the insured to pay a certain deductible before covering a medical bill. Let’s say you injured your ankle playing soccer and, after visiting the doctor’s office, discover you’ll need surgery. Now there’s a $4,000 hospital bill that definitely wasn’t factored into your monthly finances. Thankfully, your insurance policy will cover majority of the costs, after you pay the $1,000 deductible. Scenarios like this can be an alarming wake up call. For people living paycheck to paycheck, $1,000 out of pocket isn’t an option. For those with at least some savings, charging the remaining amount to a credit card or borrowing the funds from a family member still adds more debt to their worries. This is why it’s important to have an emergency fund—money reserved for rainy day situations.
Life happens. From car issues to unsuspected bills, budgeting for a rainy day can be a challenge. Simple, a digital banking service, has an emergency savings option through its checking account. This enables users to set aside a small percentage of their “safe-to-spend” money incrementally into their “goal” money, a separate division within the checking account that is hidden from daily spending. This feature makes it so the account holder can gradually build an untouchable rainy day fund without needing to open a separate checking or savings account. The emergency savings option is customizable, so users can opt for daily, weekly, or monthly transfers from their direct deposit.
Additional Savings
Maybe you’ve already set aside an emergency fund, but still have difficulty saving for other occasions, such as a vacation or honeymoon. Banks like Chime have automatic savings features that transfer 10% of the user’s paycheck straight to their savings account. Chime’s automatic savings option also rounds up daily debit card purchases to the nearest dollar, transferring the difference directly to the savings account. This enables account users to save little by little without interference with their normal spending habits.
Monitoring Finances
There are several factors that go into budgeting, including tracking your spending. Some people just aren’t conscious of how much money they’re spending on a day-to-day basis. Someone who always uses cash can easily lose track of purchases over the course of a week. Someone who generally uses a debit card can possibly overdraft if they are not aware of their remaining balance.
Fortunately, banking solutions are now available while on-the-go. Banks such as USAA have mobile apps that allow users to monitor their checking account transactions, showing what and when they spend directly on their smartphone. With USAA mobile app, users can immediately access their account balance, setup and use the bill payment feature, and even receive help from a virtual assistant. Banking mobile apps are a great way to access, monitor, and manage personal finances all in one place.
Customer Perks and Financial Benefits
If you’re skeptic about the fees associated with traditional checking accounts, you may want to consider an online bank. Traditional brick and mortar banks generally charge customers additional fees to cover costs of running the physical branches. Typical account holders can expect to pay for monthly maintenance fees, minimum balance charges, and ATM fees if not within their bank’s network. These extra fees can still be problematic for individuals trying to strategize a budgeting plan.
Checking accounts through digital banks, on the other hand, can work in your favor. Ally Bank, for example, has no monthly maintenance fees and provides ATM reimbursement for fees charged at other ATMs nationwide. Discover, another online bank, has no balance or account activity requirements, and even offers cashback deals on debit purchases.
To effectively save and live within your financial means, it’s essential to not only learn how to budget, but to also take advantage of budgeting resources. Utilizing checking accounts can help you track your spending, monitor your balance, pay bills on time, and even set aside money for emergencies. It’s also common to use more than one checking account, where each account is dedicated to separate major expenses. Visit our top ten page to review and compare checking account offers and benefits from both digital and traditional bank institutions.