Wealth Management
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Plan for your
Future
Effective Strategies for
Saving
hidden
Pay Yourself First
When you pay your monthly bills, write a check to yourself first and put it in your savings account.
Record, Balance, Repeat
Recording each transaction in your checkbook register and adding or subtracting it from the balance is the first step to simplifying the balancing act.
It’s important to record the transaction at the time you actually write the check, make a withdrawal, or make a deposit.
By recording the transactions and balancing your account total in your checkbook register, you’ll get a clearer picture of your spending habits and know exactly how much money you have. And, if for some reason you detect a problem, the sooner you can correct it, the better.
The Balancing Act
Balancing your checkbook each month within a day or two of receiving your statement will not only reduce your stress level, it will lessen the amount of time it takes to complete the task. On the back of your monthly statement is a handy form to help you balance. Use it along with the following steps to make balancing a snap.
7 Steps to
better money management
Step 1
Calculate your Net Income. Know all your sources of income after deductions, like income taxes and 401k, are removed. This number ultimately determines what you can spend each month.
Step 2
Create a Personal Budget. A budget is your roadmap for spending and is a tool to help you achieve your financial goals. Save your receipts and take the time to add up all of your expenses for a month. Subtract your expenses from your Net Income, calculated in Step 1. If the result is a positive number, then you are living within the limits of your income. If the result is a negative number, your expenses are exceeding your income. Look for non-essential expenses that you can reduce and recalculate. Ask yourself if each expense is a “want” or a “need,” and try to minimize spending on the “wants.” Most importantly, once you create a budget, stick with it. Make adjustments, as necessary. Having a budget will allow you to control your money rather than your money controlling you. Ask your banker for a copy of the Personal Budget Planner, which will help you create a budget.
Step 3
Balance your Checkbook. The balance in your checkbook is a critical number in money management because it allows you to know exactly how much money currently you have to save or spend. Keeping an accurate checkbook register also allows you to review where you spend your money. Be sure to record all transactions, including ATM/Visa Check Card transactions, checks, and deposits. For more information on balancing your checkbook, request the brochure “Eight Simple Steps for Balancing Your Checkbook” from your banker.
Step 4
Minimize your use of credit cards. Millions of Americans are in debt. Credit card debt is an easy trap to fall into. The best way to avoid this trap is to avoid using credit cards altogether. If you like the convenience of a credit card, consider getting a debit card instead. Debit cards are accepted at most places that accept credit cards. The difference is that the expense is automatically deducted from your checking account balance, which reduces your urge to spend more than you have. Be sure to track each debit card transaction in your checkbook ledger, just like you would if you wrote a check.
Step 5
Pay Down Your Debt. If you have credit card debt or other debts, pay the maximum to your highest interest rate debts first and the minimum on lower interest debts to pay debts faster.
Step 6
Establish Savings. Pay yourself first. When you pay your monthly bills, write a check to yourself and put it in your savings account. If you get your paycheck deposited automatically, ask your employer about having a portion of your paycheck deposited to your savings account.
Step 7
Know Your Credit History. Credit reporting agencies collect data regarding your credit repayment history and sell this information to lending agencies.
If your report shows that you are late paying bills, have maximized lines of credit, or have bankruptcies or other collection activities, this will negatively impact your ability to get credit.
You can request your credit report from the following credit reporting agencies:
- Equifax www.equifax.com
- TransUnion www.transunion.com
- Experian www.experian.com
8 Steps for
balancing
your checkbook
Step 1
Step 2
Record Service Charges. In your checkbook register, record any charges that have been subtracted from your account, as shown on your statement. These charges may include:
- Monthly service charges
- Per check charges
- ATM transaction charges
- Non-sufficient funds fees
Step 3
Verify Deposit Amounts. Look at your latest statement and verify that all deposits listed match the deposit amounts listed in your checkbook register. Make a list of any deposits that are listed in your register but do not appear on your statement. Add these together.
Tip: Use the worksheet on the back of your statement.
Step 4
Match All Check Entries. Match the entries in your register with the transactions listed on your statement. Compare check numbers, dates, and dollar amounts on all checks written. If these items match, place a check “P” mark next to the transaction in both your register and on the statement.
If they don’t match, circle the item in both places so that you can come back to fix the error once all of the transactions have been checked off.
If Transactions don’t match, check for one of three errors:
1. The item was recorded incorrectly in your checkbook register.
2. The item paid was credited to your account for the wrong amount.
3. Your check numbers were listed incorrectly.
To Correct the errors:
1. Simply look at and/or recheck your canceled checks or check images, deposit receipts, and/or ATM and Visa Check Card receipts.
2. Remember some items will not be checked off. These are called “outstanding items.”
Note: If you do not have cancelled checks or images returned with your statement, contact your branch and have them send a copy of the item in question.
Step 5
Check for Outstanding Items From Previous Statements. Be sure that all of the outstanding items from your previous statements have been included in this statement. Otherwise, they are still outstanding.
Note: If an item is outstanding for 60 days or more, contact the person or company you wrote the check to and see if the check has been received. If it hasn’t, the check may have been lost, and you may want to call the bank and place a stop payment.
Step 6
Verify Other Debits on Statement. Verify that additional withdrawals listed on your statement, other than checks, are charged for the amount actually drawn. This includes ATM withdrawals, debit card transactions, and any automatic debit transactions like insurance payments, loan and/or utility payments.
Step 7
List All Outstanding Checks. Make a list of all outstanding checks or ATM/Visa Check card withdrawals. These are transactions that appear in your checkbook register that do not have a check “P” mark next to them. Add these items together. Tip: Use the worksheet on the back of your statement.
Step 8
Balance. Now, balance your checkbook register with your statement. Use the formula located on the worksheet on the back of your statement.
