Idea: Organize your finances online
If you haven’t done so already, making the change from paper records to managing your money online can be a great way to keep your finances organized. There are a number of benefits to online banking: a paperless system is environmentally friendly and cheaper (no need for stamps). Also, if you’re concerned about identity theft, online bill payers are 10 percent less likely to have their identities stolen versus those who use the standard envelope and stamp payment role (Javelin Strategy & Research).
However, the number one benefit may be that, pure and simple, online banking is easy. For starters, paychecks are now routinely direct-deposited into an employee’s banking account on set dates, which eliminates the need to physically deposit paychecks at the bank. By accessing your checking account online, you can check your account balance at any time and can also set up payments online. Phone bills, insurance, rent, utilities – essentially any bill you receive that has an account number can be drafted online from your account. Automating your payments will require some setup, but it is worth doing.
First coordinate your billing dates by calling the companies and asking to have your billing date switched to the same day of the month, just after your paycheck is deposited. Then set up your checking account to automatically pay the bills a few days later. This will ensure your bills are paid on time - one of the top factors in determining and improving your credit score.
It’s a good idea to have separate checking and savings accounts, with overdraft protection on the checking account directly from the savings account – this essentially allows you to avoid paying any “overdraft” fees because any money you spend beyond the balance that’s in your checking account is transferred from your savings account. You can set this up through your online banking Web site or credit union.
Online banking can also be a convenient way to manage your longer-term savings portfolio, as you can automate your investments as well as your bills. Auto payments to your 401(k) other retirement fund are usually done through your employer, but other investment payments can be set to draw each month such as a Roth IRA.
