January 25, 2024
Banking 101: Simple Steps for a Healthy Beginning to Your Financial Journey
Personal finances can be intimidating but just like most things in life, financial wellness is rooted in developing healthy habits and routines.
Ask most adults about budgeting and saving and one common response you may hear is, “I only wish I started sooner!” Below is an overview of some banking concepts, with a few tips to get you started building healthy financial habits that we encourage anyone to consider. Target a few that align with where you are on your financial journey, get started and learn as you go. Your future self will thank you!
Checking accounts are for your day-to-day finances. This is the account to which your paychecks will be deposited and from which bills will be paid. It is also the account linked to your debit card. Most banks offer free checking accounts which can be opened at a local banking center or online in less than an hour. If you are under 18 you will want a parent or legal guardian with you.
- Start a Healthy Habit Just because you have money in the bank doesn’t mean it’s there to be spent. Create your budget. First set income aside for savings and expenses such as gas and cell phone. Then designate a certain amount for recreation and don’t go over that number. Download your bank’s mobile app to keep track of your money to ensure it aligns with your budget.
- Personal Goal Build a one-month cushion of living expenses into your balance. For help setting your budget, try one of Cape Cod 5’s budget calculators . The Household Case Flow Tracker is a great place to start.
- Extra Credit Automatic Bill Pay. By setting your bills on an automatic payment schedule you will avoid late fees and missed payments, which will help boost your credit and keep your rates lower. Just be sure you have enough money in your account to cover any bills that are on autopay!
Savings accounts are for setting money aside toward a goal or emergency fund and should not be relied upon on a monthly basis. Similar to the checking account, bank staff are happy to help with opening your savings account at your local banking center or online. Currently, there are many options to help you grow your funds through a high yield savings account.
- Start a Healthy Habit “Pay yourself first.” With every paycheck, first set aside money into a separate account for long-term goals, emergencies and peace of mind. Saving 20% of your income is a worthy goal, but the habit is more important than the amount so pick a number that you feel comfortable with and can stick to.
- Personal Goal Set up an automatic transfer from your checking account and treat it like one of your automatic bills. Start small, with an amount you know you can easily afford. Make it a long-term goal to save three months of living expenses in an emergency account.
- Extra Credit What might you be saving toward? Maybe it’s a car, college expenses or vacation. Getting started on retirement saving by opening and contributing to a Roth IRA is another option. Are you receiving tips? Maybe you can use that as your pocket money and bank the paychecks? For more ideas and some best practices on learning to save, visit our America Saves Week blog .
Direct deposit allows you to have your paycheck deposited electronically to an account of your choice, which is safer than possibly losing your check and more dependable than needing to drive to work on an off day to get it. If direct deposit isn’t available, using your bank’s mobile app to immediately take a picture and deposit your check is a great alternative.
- Start a Healthy Habit Bring your direct deposit documentation with you to your employer when asked to fill out your other tax forms. Direct deposit authorization forms can typically be picked up at your local banking center. If you are using a blank check instead, your routing number is the nine-digit number on the bottom left. Just to the right is your account number.
- Personal Goal Develop a comfort level with direct deposit rather than cashing a live paycheck. Learn to plan your monthly income as a part of your budgeting process. And you can always use your bank’s mobile app to check that your pay has gone into your account and monitor your balance!
- Extra Credit Did you know that you can split your direct deposit so that some goes to your checking, and some goes into your savings? This can be a great way to automate your savings.
Set a weekly 30-minute appointment with yourself to track your spending and build a longer-term budget, making sure that it all aligns with your goals and priorities. Personal finance is mostly about healthy habits and behaviors, so choose a reasonable goal and trust the process you have laid out for yourself. Remember, progress not perfection!
Ready to keep going? Learn more about the topics below!
Credit Another important financial tool is a credit score, which impacts the cost at which you may be able to borrow money. Click here to find out more about credit.
Security Visit our Security Center to find out ways to protect yourself and your finances.
Have a question about your banking or about ways that Cape Cod 5 can help make managing your finances easier? Reach out to us. We’re here for you!
Financial Know-How Program Manager
Jim joined Cape Cod 5 in 2018 and has been the Financial Know-How Program Manager since 2020. He has a degree in Psychology from Catholic University in Washington D.C. and is a graduate of the New England School of Finance, a two-year program offered by the Massachusetts Bankers Association and hosted at Babson College. Jim is an active member of the community, serving as an advisor to a local nonprofit and on the Barnstable High School Business Innovation School steering committee. He lives in Plymouth with his wife Brigid.