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Shakin’ the piggy bank: How to make smart money decisions

[ 0 ] January 22, 2009 |

Andrea Findley
Prairie Editor

Slyly, I looked down at my check and tried to stay calm. The United cashier had no clue this little piece of paper would be supporting me in this check-writing conspiracy.

Technically, this was a hot check and I was broke. Not only was I broke, but today was Wednesday—two days short of payday. But, that box of Fruity Pebbles and gallon of chocolate milk were calling my name. I couldn’t resist.

Whether it is candied cereal, red stilettos or hockey tickets—spending can explode in fewer than two shopping trips.

In a Quicken survey on Intuit’s Web site, almost half of all college students have bounced a check and only 42 percent of students balance their checkbook once a month.

If you’re a college student and working part time, chances are—being broke is life.

Thankfully, you don’t have to blame poor checkbook balancing skills for your negative balance.

After working as a bank teller for two years, I learned how to trick the system. But you don’t have to trick the system to be a good personal accountant.

Here are some suggestions for staying out of your overdraft and away from your mommy’s handouts.

• KEEP A PEN HANDY TO WRITE EVERYTHING DOWN.

College students rarely enjoy the advantage of surplus cash in their checking account.

Forgetting to write a purchase in your checkbook can turn into a nightmare if you are living on a tight budget. The easiest way to make sure nothing gets missed is to put the amount in your check register immediately after the purchase.

• HOLD ON TO YOUR RECEIPT.

If you forget to write the amount down when you are making the purchase, always keep the receipt in a convenient place. Even if you think you know how much the purchase cost, checking the receipt offers a way to double-check yourself and avoid errors. Then when you go back to balance your checkbook, you won’t wonder about that $11.95 debit.

According to Ginta Aaron, a member service representative at the People’s Federal Credit Union, good basic math skills are imperative to checkbook balancing.

“One of the biggest mistakes people make is adding and subtracting the balance,” Aaron said. “Once you have completed all the transactions, check it again. I have come across a lot of people that if their balance is wrong, they just write it wrong and keep going. That’s not a good idea because you think there is money that you don’t really have.

• SIGN-UP FOR ONLINE BANKING EVEN IF IT COSTS.

(If your financial institution doesn’t have this, then move to another one.)

Banks have made it as easy to keep up with your purchases with promotional products such as online banking, banking over the phone and ATMs. Of everything a bank offers online banking caters to the 21st century generation the most. Not only can you see your account in real time, but you can set up your bills to be paid automatically with services like bill payer.

• ALWAYS KEEP AN “EMERGENCY STASH” IN YOUR SAVINGS.

Although, college students thrive on the “paycheck-to-paycheck” theme, keeping money in savings can actually save you money.

Most banks offer overdraft protection. Overdraft protection covers a check, debit or automatic draft that comes through the checking account by taking the money out of savings and paying the check instead of returning the check. Funds automatically transfer from savings without charging a fee. Insufficient fund fees can range from $20 to $50, not to mention fees charged by the store.

• PRIORITIZE YOUR SPENDING.

All top 20 ring tones do not need to be on your cell phone. It’s not about what you can spend, but what you can afford. Buy generic toilet paper—the Charmin bear won’t be upset. Make sure bills are paid, your tummy is full and the gas gauge isn’t on empty—then spend what is left over.

• IF YOU’RE BROKE, CREATE A BUDGET.

Budgets aren’t that hard. Don’t be intimidated because the last time you heard the word budget was on CNN. Look back at last month’s check register and see where you spent the most money. Make a list of expenditures that you must pay each month with amounts that are reasonable. If there is extra money left over, do not go straight out and spend it. Emergencies happen and money should be set aside for those instances. You cannot control a flat tire or botch with the flu. When your budget is complete make sure to stick to it.

•PAY BILLS ON TIME BECAUSE LATE FEES ADD UP FAST.

Late fees are like taking your money and lighting it on fire. Sometimes, you have to make a payment late. That is acceptable. Don’t allow yourself to be careless. Make a bill calender and write due dates so that you will remember.

• SEVERAL TIMES A WEEK, HIGHLIGHT OR CHECK OFF ITEMS THAT HAVE CLEARED.

Don’t ignore balancing your checkbook. It’s there for a reason. Go online while you’re checking your Myspace and mark each purchase that has cleared the account.

“Never wait until the end of the mouth for your statements,” Aaron said. “ Balance your checkbook at least once a week. Debit cards have made life a lot easier. However, some folks go by what the ATM tells them is in their account. Let’s say you went Christmas shopping on Black Friday and Saturday morning you wanted to go to breakfast. Not all of your purchases have cleared and the ATM only updates every 24 hours. So, that first balance may have been wrong.”

• SIGN UP FOR DIRECT DEPOSIT.

Avoid driving to the bank. Set up your payroll to go directly into your checking account. This takes the paper trail out of getting paid. You usually will get paid earlier, also. Payroll hits accounts as early as 2 a. m. on paydays.

• IF ALL ELSE FAILS, JUST HAVE A SAVINGS ACCOUNT.

If you’ve tried everything and checks are still bouncing off the ceiling, close your checking account and rely on a savings account. Get out enough cash to make small purchases for a week and use money orders for big bills like rent and car payments.

A final tidbit of advice—learn from your parents. Whether poor or rich, learn from their mistakes or from their good habits.

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