Want to stay in control of your finances? Start with your day-to-day money management. Earning more money could be as simple as making the switch to a new checking account. We’ll share some tips and tricks for how to manage your finances wisely, including the benefits of opening a credit union checking account.
Track Your Spending
Tracking where your money is going is the first step in managing your finances effectively. To be in control of your saving and spending, you first have to understand how much of your money is going toward which expenses. Fortunately, many credit unions do this work for you.
If you have an existing checking account, log in and look for a feature that allows you to track your prior months’ expenses. You should be able to track how much of your money went toward major spend categories, such as groceries, travel, utilities, and entertainment or dining out.
If you don’t see an option to view your spending, you may have to add up these totals yourself by checking your recent account statements. The Consumer Financial Protection Bureau has a spending tracker tool to help guide you. This will assist you in identifying any areas where you may need to cut back.
For instance, should you cancel a few of your streaming subscriptions? Could you cut back on dining out? Look for areas where you may be spending more than you should. It will help you with our next step—budgeting your money.
Budget Your Money
If you want to control your money, you first have to be able to control exactly where it goes. You can do this by creating a zero-based budget. Start by adding up your monthly income. If your income changes from month to month, estimate your average monthly income. If you want to work with a more conservative estimate, use your lowest monthly income over the past 12 months.
Once you’ve calculated your monthly income, total up your expenses. Start with necessary expenses like your rent or mortgage payment, groceries, gas, and utilities. Include bills and loan or credit card payments as well. Then add up your discretionary expenses, like travel, entertainment, and community memberships.
If you’re under budget, decide how you’re going to use that extra money. When you’re creating a zero-based budget, every dollar you earn should be allocated to a specific category. If you have money left over, you can decide to put it toward debt, savings, or investments. But whatever you decide to do with it, make sure it has a place to go. Be intentional with your money.
On the other hand, if you see that you’re over budget, find ways to cut back. Prioritize your expenses and see if there’s anywhere you can trim costs. For example, if you have a high-interest mortgage payment, perhaps you could refinance for a lower interest rate or lower monthly payments.
If you’re having a tough time cutting costs, brainstorm ways to earn extra income, such as picking up a side gig. The key is to live within your means and stick with your budget once you create one.
Keep Extra as a Buffer
If you’re living on a tight budget, this step may seem a bit challenging, but it’s important to keep extra money in your checking account than you expect to spend. It may help you avoid overdraft fees, late payments, or monthly service charges. Have an annual subscription that auto-renews and you forgot to cancel it? Are some of your expenses a little higher than usual this month? A buffer will help you head off any issues and prevent penalties.
So how much money should you be keeping in your checking account? Many financial experts recommend one to two months’ worth of living expenses. If that seems like too much for you to do right now, start small and work on gradually building your way up to that amount.
Balance Your Checkbook
Get a check register or pull up an Excel spreadsheet. Whichever method you prefer, it’s important that you balance your checkbook. All you have to do is jot down your starting account balance then add in your deposits and subtract any withdrawals or payments.
Wondering why you need to do this when you can just log into your account and check your account balance? There’s sometimes a delay in transactions posting to your account. So your current account balance isn’t necessarily the amount you have available to spend.
Balancing your checkbook will also help you notice any discrepancies, like double payments, overcharges, or fraudulent transactions. If you see something that doesn’t look quite right, you’ll be able to address it and save yourself from potential financial losses.
There’s a reason people say knowledge is power. Stay in control of your finances by staying on top of your daily spending.
Open a Credit Union Checking Account
Credit union checking accounts have many advantages you may not get from other financial institutions. For instance, you may get certain perks, such as ATM fee refunds or waived monthly service charges. If you’re looking for ways to save money, simply becoming a member of your local credit union could help you find a little extra each month.
Some credit union checking accounts, like the ones offered by Capital Credit Union, also help you earn rewards or monthly dividends on your deposits. This means you don’t have to do anything except sit back and watch your money grow.
If you don’t already have a checking account that helps you earn money, it’s time to open one. Based in northeast Wisconsin? Stop by a Capital Credit Union location today and learn firsthand how easy it is to stay in control of your finances. It’s as simple as making smart financial decisions—and that starts with opening the right checking account.