Managing the Money
keeping a close eye on personal finance
It's an old anecdote - the tale about Grandma stashing her money in the mattress because she didn't trust banks. There are probably a few people who still do this, but most are less cynical. They know their cash is safer with the reputable financial managers, experts who offer advice on plans that are best-suited to individuals and businesses. These can be anything from basic everyday working accounts to more complex arrangements involving the regular or periodic transfer of funds from one account to another. Once set up, the customer is able to sit back and let the banks take care of the money. That way there is time to spend on other things far less tedious than watching the pennies. Unfortunately, a financial plan that was ideal in the beginning is not necessarily going to continue in the same vein for years to come. In fact, interest rates and banking practices change so rapidly these days that yesterday's profit can turn into tomorrow's loss in the blink of an eye. In essence, the solution is simple - keep a close eye on finances; and if you can spare a few minutes each week to manage the money yourself, you will be better off in the long run.
I have mentioned before about shopping around for the best deals, and this still applies. Although most major banks seem to offer the same interest, fees and conditions, there is usually one that comes out on top. Then it is a matter of approaching the rest to see if they are prepared to equal or better the offer. At this early stage, close enough isn't good enough. Even a 0.02% improvement shouldn't be dismissed as petty. Extra profit, however small, will start a new plan on a firm footing. The danger comes later with complacency. Assuming that everything's fine and that there is no need to keep checking is a trap many are caught by. Falling interest rates are passed on to customers, often without notice. This may be regarded as sneaky, but the right to do so is generally included in the terms and conditions which everyone agrees to but few ever bother reading.
With online banking becoming the norm, it is relatively easy to monitor what's happening with the various accounts you may have. Noticing that the interest rate has dropped since the last check is a nudge to compare it with those institutions which weren't as favourable before. They could have realised they were losing business and decided to increase rates in a bid to win back old customers and provide an incentive for new ones in the market. That's the time to take advantage. Switching banks on a regular basis may seem an unnecessary knee-jerk reaction, but your money has to work for you. Left in the care of self-serving financiers it will, at best, stagnate. In some instances it may even diminish; then Grandma's mattress will appear less of a joke.
Because everyone's circumstances differ, the type of accounts will be set up to facilitate the general financial requirements of individuals and families. There will probably be a working account into which income is paid and from which expenditure is managed on a regular basis. Movement in and out of these accounts is expected to be frequent, and fees would reflect this; but that's not to say they are all the same. Some may offer lower fees, provided the number of monthly withdrawals does not exceed a specified figure. Over and above this, there is likely to be a charge per transaction. So, if there are sufficient "free" transactions to cope with the normal budget in that period, this is the one to consider. The downside is that whatever's left untouched in the account is unlikely to collect much interest. Some even pay nothing below a specified total, meaning that only the amount above this line will qualify for interest; and if the account drops below by a single cent, interest payments will be null and void for that month.
It ought to be obvious that this is an encouragement to deposit as much as possible into these accounts so that a portion, at least, continues to earn interest; but, of course, at a fairly low rate which disadvantages the customer and keeps the bankers smiling. One way to inflict a little frown is to open another account that pays better interest. That's the one to put any surplus in. Excess from the working account can then be transferred in person, or on-line to minimise inconvenience. Simply decide on a suitable reserve to cover expenses until the next income deposit; and move anything over that figure into the better-paying account. Actioned on a regular basis, the savings, though only small, will mount up. Just be aware of any penalties for making withdrawals.
Click this 
image to view or print complete article.
Money Health Focus Popcorn Recipes eBooks About Contact
Where every effort has been made to be accurate and fair-minded, comments and opinions expressed on this website are based on personal experience and do not necessarily reflect the views of the wider community or those groups and institutions mentioned. A Season of Happiness and its staff accept no responsibility for any outcome based on suggestions offered. What works for us may not work for you. Please bear this in mind.
copyright © 2011-2016 All Rights Reserved