Your Dream: I am financially independent and have all the money I will ever need.

Long-Range Goals: I will purchase a home of my own and do some traveling. I’ll continue to make and invest money and be financially responsible.

Medium-Range Goals: I will continue acquiring the skills I need to have the income that supports the lifestyle I want. Even though I’ll have the expense of living on my own, I’ll put 10 percent of my income into a wealth investment account and learn how to invest to build wealth. I will pay off my student loans, and I will fund my retirement account as best I can.

Short-Range Goals: I will have three to six months of living expenses saved in the event I ever need the money. I will also maintain a savings account and save enough to cover the expense of moving out on my own. I will find a better job and/or start my own business.

Immediate Action: I’ll take advantage of every skill I have, and I will explore every opportunity I can create for myself to earn more money. Since I’m not yet on my own, I’ll faithfully try to put at least 50 percent of my earnings into a savings account. I’ll manage my spending so that I don’t spend more than 50 percent of what I bring home.

Your Present Reality: I’m broke, and I can only work part-time because I’m still in school.

Your Checking Account

Once you are receiving regular earnings and paying your own bills, you are probably going to need to open a checking account. Many employers will only pay employees by direct deposit of wages into an account, so it’s time to head for the bank (or the savings and loan, credit union, or brokerage firm). There have never been so many choices available for handling your money.

In today’s world, you can bank all over the country without leaving your computer screen. You may end up doing most of your banking and bill-paying online. You may want to do all your banking at one location close to where you live. Check out every available option and go with what feels right. Make sure you are happy with the services you get. Unlike the old days when many towns only had one bank, today you have many different options from which to choose.

Once again, you are going to have to do some research and leg work. Here are some things to consider when trying to find the checking account that is right for you:

• The best checking account is the one that is totally free. This means there is no fee or service charge to pay every month to maintain the account, no per-check fee, no per-deposit or per-withdrawal fee, no minimum balance required, and no regular charges whatsoever. If you can find it, this is the account for you!
• Keeping in mind that absolutely free is best, the next-best checking account is the one with the overall lowest fees and the best services. Find out:
  • What is the monthly service charge? (Don’t forget that a $10 per month service charge equals $120 every year!)
  • Do you have to maintain a minimum balance?
  • Are there charges involved with getting or using a debit card?
  • Are you charged to use the bank’s automated teller machine (ATM)?
  • Does the account have overdraft protection in the event you bounce a check? Does the overdraft protection involve an additional fee?
  • Are there any other fees you need to be aware of?
• Generally, free accounts do not pay interest. This may work out just fine for you, because you won’t earn much interest on your checking account funds anyway. Some checking accounts may appear attractive because they pay a low interest rate, but actually involve monthly service fees that are higher than the interest you are likely to earn. Some checking accounts are free if you maintain a minimum balance. Find out how much you will be charged if your funds ever drop below the minimum amount required.
• Don’t be shy about asking for the services you want if they are not offered to you. Can you have your monthly service fee waived if you directly deposit your paycheck? Want a higher rate of interest on your savings account? Ask the bank manager. A lot of financial institutions are trying to attract students and young people because they are interested in establishing long-term relationships. You may want a checking account right now, but you may need a home loan in the future, and your bank will appreciate the additional business.
• The small bank in your neighborhood may have fewer and smaller fees than the larger one. Be sure to check it out.
• Custom designer checks cost more and may just be an expense you can live without. Consider purchasing your subsequent checks from a discount check company.

How To Write a Check

Even if you use a debit card for most of your day-to-day transactions and routinely pay your bills online, occasions may arise when you need to write a check to make a payment from your account. Write clearly and use a black or blue fine line waterproof permanent marker or pen.

1. Today’s date goes on the “Date” line. Putting a future date on a check is called postdating. Very few places will accept a postdated check.
2. The correct name of the person or business goes on the “Pay To The Order Of” line. Draw a line over to the dollar sign.
3. Write out the payment amount on the blank line that leads to the word “Dollars.” Use xx/100 for the cents. Draw a line over to the printed word “Dollars.” Example: Twelve 34/100. Noting the cents and adding a line over to the dollar prevents any additions, such as: Twelve hundred————————————DOLLARS.
4. Put the amount of the payment, written in digits, by the dollar sign. Example: $12.34.
5. Your signature goes on the blank line at the bottom right. Make sure you always use the same signature, matching your printed name on the check.
6. Never sign your name to a blank check.
7. The “Memo” line is for recording for your own purposes what the check is purchasing. For example, “concert tickets” may help you remember exactly how much your friend owes you for his ticket that you paid for by check.

Watch Out for Bouncing Checks

Bouncing a check can be expensive. This means you wrote a check and your checking account had insufficient funds to pay the amount. A single returned check can easily end up costing you over $50 in fees. The fees include a charge from your bank for bouncing the check and a charge from the business to which you wrote the check. Being familiar with your financial institution’s policy on “funds available” will help you avoid this particular mistake.

When you deposit a check (such as a personal check from someone else) into your checking account, a portion or the whole amount of the check may not be available for you to use right away. If you do not have other money in the account and you write a check from your account, the check you wrote may bounce if that check is presented to your bank before the funds you have in the account become available.

Trying to guess when a check will be posted to your account can be tricky. Some checks are held by whomever you write them to; other checks may clear the same day you write them. It is, of course, best to always have the money available in the account before you write a check. Some funds that you deposit into your checking account will be available immediately; some may be available in five days.

Find out if a hold is placed on your earnings. A hold delays access to deposits to your checking account until the deposited funds are actually credited to your account. Should this happen, introduce yourself to the manager and explain that you will be making regular deposits. Chances are good that you will not have a hold placed on your wages. Be sure you understand your financial institution’s policy. Knowing the policy is a good way to avoid those high returned-check fees.

Other Banking Services

ATM/Debit Card

When you open your checking account, you will probably receive an ATM (automatic teller machine) or debit card. An ATM is a terminal that provides you with 24-hour electronic access to your accounts. You can withdraw cash or make a deposit. To use an ATM, you need a personal identification number (PIN) and an ATM or debit card. The same card can be used at many other places as well, such as grocery stores and gas stations.

Using a debit card can be convenient. In fact, you may find that you make most of your purchases with your debit card. Keep these things in mind if you are a debit card user:

• When you make a purchase or a withdrawal, the money comes out of your account immediately—that instant. The money has to be there. You must keep track of every transaction you make. Write down any account activity right away. This is the trickiest thing about a debit card. Forgetting to write down just one withdrawal from your account could lead to being overdrawn. As with a credit card, don’t forget that you are spending real money. If you spend cash, you can tell if it’s gone. When you use a debit card, it is not that easy to realize you have spent real money unless you write what you spent down and deduct the amount from your balance.
• ATM charges can add up. If your bank’s ATM is free, make it the ATM you use. Using an ATM other than your own banks can end up costing you plenty in surcharges. Want to check your balance before you make a withdrawal? Well then, you may get charged for two transactions! Don’t forget that when you use your debit card in the grocery store, you can request extra cash. This might save you an ATM fee. Just be sure you’re using your debit card and not a credit card!

Online Banking

Online banking is a fast-growing, fast-evolving banking option. For those who have Internet access, this may be an effective way to pay bills, add to savings, and maintain an investment portfolio.

Many banks have low account service charges for automatic bill paying or offer the service for free. When checking out your online options, make sure you understand every feature of the service, exactly what the charges are for, and if there are any hidden costs. Will you have to pay an additional charge if you need to pay a bill by phone or mail?

Knowing when a fund transfer takes place is critical to avoid becoming overdrawn. If you pay your bills online, you need to make sure you know when the bank debits (or takes the money from) your account.

Reminder: In addition to advanced encryption technology and firewall security, your account information online is protected by your personal password. The most difficult passwords to decipher contain both letters and numbers. Make sure yours is not easy to figure out, and be sure to guard your password carefully.

Whether you do your banking online or at the local bank, make sure you are comfortable with your banking decision. If you really don’t like the choice you made, shop around until you find what you do like. Being uncomfortable with your decision may make handling your finances an unpleasant chore and may keep you from paying close attention to your money. Try to create a system you enjoy, and you will be inclined to stay on top of your finances.

Keeping It Straight

No matter what banking option you choose, you will need to spend a little time keeping things straight and on track. Reconciling your checkbook or balancing your account, will help eliminate your chances of becoming overdrawn. It is also your opportunity to catch a mistake made by your financial institution. Checking these things regularly will head off most serious errors:

• Notice whether you have correctly deducted every debit card amount from the money you think you have.
• Check that the written amount of every canceled check is the same amount debited from your account.
• Be sure the check amount is exactly the same amount you entered in your register. For instance, a check may be made out for $13, but you wrote $18 in your register.
• Check the receipts of deposit issued during your statement period. Be sure every deposit has been credited to your account. Make sure you entered every deposit into your register.
• Deduct from your register any service charges that you incurred during the statement period.
• Add to your register any interest payments that were paid during the statement period.
• Notice whether you have correctly entered all ATM transactions and fees into your register.

If you receive a paper account statement, keep in mind that your statement only reflects transactions that have taken place during specific dates. If you made a deposit into your account after the statement closing date, it will be noted on next month’s statement, so you’ll need to add the additional deposit to the ending balance noted by your bank. This is your new total. (The flip side of the statement should have a spot for figuring this out—don’t use your register.)

Since the checks or debits reflected on your statement are only the amounts that cleared the bank by your monthly closing date—not necessarily all the debits you made or checks that you wrote out—you need to add up those outstanding amounts and subtract that amount from your new total.

This new amount should be the same as what is in your checkbook register. If it’s not, look specifically for the amount that you are off. For example, if you are off by eight dollars and that is the amount of your monthly service charge, you may have forgotten to deduct that charge from your total. Staying on top of your bank statements and not letting them go for too long makes the job a whole lot easier.