Managing household finances is not necessarily an easy task. It seems simple — money in versus money out, and pay your bills on time. Then why is it so difficult for many of us to do? The tips contained in this post will help you improve your monthly financial management.
My husband and I stay on top of our bills and have a few little tricks up our sleeve to make things work better and more efficiently for us. However, because I’m a believer that there’s always things that we can do better and areas that we can improve, we have recently enrolled in Dave Ramsey’s Financial Peace University course at a local church. We just started last Wednesday night and I am going to write a separate post on that soon, to chronicle our journey through the course.
And now, for the tips!
- Be Cognizant About Where to Keep Your Money
Banks are NOT what they used to be. I know first hand, because I work for one 😉 But in all actuality, between fees, direct deposit requirements, minimum balance requirements, and the tellers all trying to push us to automate our banking with ATMs and mobile banking, it’s definitely a changed industry. Part of that is nice, I definitely like the convenience of being able to deposit a check with my phone without a visit to the bank or even to the drive-thru ATM. But I want to be sure that when I need taken care of, it’s taken care of!
We have chosen to have a checking account with a large national bank (Chase) due to the features and convenience this provides. Online bill pay, with this Chase’s ability to recognize most payees electronically, is very handy. We have excellent fraud protection – if we’re traveling out of town, or a large purchase hits our account, we automatically get text alerts, app alerts, and an email. We can quickly validate that we made the charge and move on. There have been times in the past that we did NOT make certain charges, and the bank’s ability to handle this timely and efficiently blew me away.
There’s some downsides to an account with a large national bank though. The fees, for one. We’ve solved that by opting for a checking account that remains free as long as we have our paychecks direct deposited to the account. That helps a lot, because otherwise we’d be paying somewhere around $10-$20 per month just to maintain our account! That’s about 4.33 Starbucks latte’s for you coffee lovers 😉
However, for savings accounts, we do not utilize Chase. We instead have chosen to have our savings accounts and slush funds (more on that below) in a separate institution entirely. The reason being is that we gain better interest, have the flexibility of opening sub-accounts, can create savings goals, easily transfer money, and receive excellent customer service from Capital One 360. We have had accounts with them for years. The sub-accounts feature is perhaps my favorite. Underneath our main savings account, I’ve created various sub-accounts that serve different purposes. That way, there’s no question what those funds are for. It’s much easier than having a “savings account” that sort of becomes a black hole of money and it doesn’t have a targeted purpose. Utilize some sub-accounts and you won’t have to wonder what’s what. I’ve had friends utilize Ally Bank and report the same features and good customer service as well. There are many online banks now that probably do the same. However, the large national bank’s savings accounts don’t make a lot of sense for us. There’s usually minimum balance requirements ($300 or so), typically a fee involved, and it would earn less interest than my Capital One accounts do.
2. Create a Slush/Sinking Fund
This has been one of the main ways for us to save for larger expenses. For instance, we have homeowner’s association dues for living in our community, and those are due twice a year, in January and in July. So, we have a set amount each month automatically transferred to a separate slush fund in our Capital One 360 account that is specifically for the homeowner’s association dues. When it’s time to pay the dues, I transfer the money back into our checking account and pay the bill. The automatic transfer keeps continuing, and next time we need to pay the dues again, the money is already there. Just remember to account for whatever is transferring out of your checking account by way of slush fund savings so that you don’t short yourself on your monthly budget in your checking account.
We have a slush fund setup for Christmas as well. I did this about five years ago after being frustrated with the lack of money we had available for holiday shopping one December. The normal bills don’t stop even though it’s Christmastime! So I opened up a separate slush fund for this, we decided how much we wanted to spend on Christmas, divided it by 12, and now, each December, there’s our holiday shopping money. And it will automatically start to replenish itself that very month, with your automatic transfers, you’ll have your first 12th of the next year’s holiday fund already back in your account to start the cycle again for next year. Because, I realized something, you guys – Christmas will always come in December 😉 Now that I know that, it’s not a surprise – and you don’t have to be surprised about having to pay for Christmas presents, if you set up something like this! And Christmas shopping can once again be something you look forward to instead of something you are disheartened about how you’re going to pay for it.
3. Set Some Things on Auto-Pay
I’ll admit it – I haven’t yet taken the plunge and converted our bills to electronic as of yet. I maintain a bills binder that works well for me and to maintain a binder sort of means I need the paper stuff to go in it 🙂 Right now, I sit down twice a month and pay our bills right after we get paid. But there’s some bills that you simply cannot be late on, that I choose to have better peace of mind with ensuring that they are paid on time. We have several credit cards that we never have very large balances on, but I have no desire to pay those institution’s $25 (or higher!) late fees and a possible interest rate increase if I pay them even 1 day later than I should. So, a year or so ago I decided to put just the credit card payments on auto-pay, and it’s been a huge relief. I simply went online to each of the credit card company’s website and authorized them to take the minimum payment out when the bill generates. The payment is made on time and when I sit down for my actual bill paying session, if we have a need to pay more on that card that month, I will send an extra payment through our online banking. But, in the meantime, they received the minimum payment when they needed it, my account is current and up-to-date, no late fees for me! Oh, and if you have no balance that month at all? Naturally they won’t take the payment. But at least you have it setup for next time in case you charge something to the card.