Having all of your family’s money in one bank account can make keeping track of your money easier, but it might not help your family meet its financial goals. While it might not sound right at first, having a few banks accounts can make your family’s financial life easier.

Instead of one big fund for everything — such as a checking account — you might be better equipped to meet several small financial goals with multiple bank accounts. If you’re smart about them, you might also save on fees and make more money off of your money.

Here are five bank accounts every family should have:

Start 5 bank accounts with regular savings

This is an account to hold money in and only use when needed. You can attach a goal to it, such as saving for a down payment on a house or a family vacation, or it can just sit around for life’s unexpected expenses.

Try to save up three months of living expenses in this fund in case of a short-term emergency.

Emergency savings

This account should be used as a last resort and is for big emergencies, such as losing a job and having enough money set aside for six to 12 months of living expenses.

Joint checking account

This is used to pay your regular bills and other family expenses, though not medical bills, which we’ll get to soon.

It’s an account you probably already have and is where most of your income should go first before it’s used to pay bills or move to other accounts. This account should at least cover your monthly expenses.

Spousal checking accounts

Each spouse should have their own checking account so they can buy something however they see fit. The amount shouldn’t be a secret from the other spouse, and it can be used as “fun money.”

If everything else in your budget has been paid for, then money in this account is each person’s spot to use as they’d like to.

Health Savings Account

Also called an HSA, this is a tax-free account to hold money for medical expenses, from prescriptions to hospital stays. There are some rules to understand before using an HSA, so ask your Human Resources department at work or search online for details.

If you’re spending a few thousand dollars a year on your family’s medical costs, then a tax-free HSA can make it less expensive.

How much money you put into these bank accounts is up to you, but do yourself a favor and make it easy by using direct deposit so that a specified amount of money is automatically deposited into each account each month.

5 Bank Accounts Every Family Should Have is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Interest rates remain low, though that’s no reason to stow your money under your mattress.

Hiding your money at home won’t earn you any interest on it, and that’s one of the benefits — no matter how small — that banks and credit unions can offer customers. But banks and credit unions have different benefits and drawbacks, and knowing how each work can make it easier to decide where to put your cash.

Here are some differences between credit unions and banks:

Profit vs no profit

The first thing to note when comparing banks to credit unions is that  banks are in business to make money and credit unions are not for profit. This can allow credit unions to offer better interest rates, as we’ll get to shortly.

Credit unions are cooperatively owned by all members and run democratically by members who volunteer as board members, who decide interest rates and other factors.

To join a credit union, you may have to be a member of an employee group, association or some other specific affiliation, and may have to live in a specific geographic area.

Interest rates

Credit unions have slightly better interest rates than banks on CDs, money market accounts, regular savings accounts and interest checking accounts, according to the National Credit Union Administration.

Better loans at credit union

Credit unions also have either the same or better rates on home loans, and their car loans can be half the rate of what a bank charges, according to the NCUA data.

Deposit insurance

Both credit unions and banks have the same protection from the federal government through the Federal Deposit Insurance Corp., or FDIC. It insures up to $250,000 per account for checking, savings, money market and CD accounts.

Lower fees at a credit union

Credit unions generally charge less in fees than banks, according to the NCUA, though its website didn’t offer specific examples.

When looking into banking fees, ask about minimum balance requirements to avoid a monthly fee, if you’re limited to withdrawals from a savings account each month, what debit card fees it charges, and if you’re reimbursed for fees at an ATM not affiliated with your account.

More options at banks

From a retirement plan to business loans and investing services, and everything in between, most banks will often offer more services than credit unions do. Banks also have more brick-and-mortar locations and ATMs that are spread around the country and are free to customers.

Wherever you decide to put your money, check online with the FDIC to ensure that the bank or credit union you want to do business with is insured by the FDIC and is a legitimate financial institution.

Choosing Between a Credit Union and Bank is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

This post on avoiding bank fees is by Ryan Bonaparte, who has written for Add-Vodka before about common financial mistakes that young adults make. Ryan is a long-time writer and author, delving into topics including personal finance, technology, and career pursuits. He lives in the Boston area with his wife and fiercely independent cat.

In the financial journey to building wealth, there are many pitfalls to watch out for, but none as insidious as fees charged by banks for standard services.

Fees can erode any earnings that you may have accrued from investments, and in some cases faster than poor spending decisions. At least with a shopping spree, you get something in return. With bank fees, you might as well be setting your money ablaze.

Bank fees to avoid

Although by law in the United States, all fees are required to be shared with consumers when they sign up for an account, it’s still very easy to pay out lots of money before you realize how much bad habits can eat away at your hard-earned money.

Here are some types of common bank fees to look out for:

ATM Fees

Even though more and more transactions occur via credit cards or mobile payments, sometimes cash is necessary. There are stores that only take cash, and many people find using the envelope method of budgeting (stocking envelopes with cash at the beginning of the month) as a great way to manage their finances.

But taking out your own money should never cost you money. To avoid bank fees, either use an account at a bank in your area or an internet bank that reimburses bank fees.

Account Maintenance Fees

Although most banks don’t charge customers fees for the accounts (really, it can’t cost them much to maintain an account), some banks do. Avoid working with these banks unless absolutely necessary.

If you do end up needing an account at one of these banks, do whatever it takes to avoid the maintenance fees. In some cases, it’s keeping a minimum balance. With others, it’s making a bill payment or setting up a monthly direct deposit.

Make sure to understand the requirements and set automatic transfers or payments to limit the headache and keep you from paying these ridiculous money-making fees.

Transfer Fees

Although the days of sending paper checks are long gone, some banks still charge fees for sending/receiving money from another bank, even if it’s to another of your accounts. While so many services (PayPal, Venmo, Square Cash, etc.) seem to understand that non-business related transfers should be free, not every bank has gotten the memo.

Again, try to work with banks that don’t charge these bank fees, but if you must, be prepared to do some legwork to avoid these fees.

If outbound transfers are subject to fees, but bill payments are not, make all payments from that account if possible. If your paycheck is deposited into one of these accounts but you need money in another account, work with your HR department to switch it up.

Although most of these bank fees are completely avoidable, sometimes we forget or misread something and end up with a painful fee at the end of the statement period.

All is not lost, however. If you haven’t been hit with a fee in a few months/years, often all it takes is a call to the bank and a nicely worded request to remove the fee. I’ve done this many times over the years, and rarely if ever had a fee stick.

How do you avoid bank fees?

Avoid Bank Fees Like the Plague is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The same holds true with giving them access to savings accounts, direct deposit and goal setting, according to a new study by America Saves on such things on low-income youth workers.

It found that low-income urban youth will save consistently when giving access to savings tools.

The survey respondents were 16-20 years old, participated in a summer employment program, and had low or moderate family incomes, according to the group America Saves for Young Workers.

Here are some of the highlights of the report:

• Following their summer employment, 58% of youth, on average, owned savings accounts, a 66% increase in ownership.
• Following their summer employment in 2015, youth ownership rates for savings accounts exceeded that of national low-income teens by 34%.
• 76% of young workers were given a choice of how to deposit their pay, and an average of 66% self-elected to use direct deposit.
• Following their summer employment program, and corresponding involvement in the America Saves program, 80% of young workers had established a savings pattern, an increase of 54%.
• By August 2015, 61% of young workers had met the pledge goal they had set at the beginning of their summer employment.
• Savings amounts remained relatively steady over time with an average of about $400 saved.
• Youth continued to save after their summer work experience with 61% of young workers having made a deposit eight months after their summer employment ended, despite only 38% of those youth being formally employed.

“This is the first time that many of these youth will receive a paycheck and the America Saves for Young Worker program plays a pivotal part in motivating them to save part of their pay for items they want and need, and for those unexpected expenses,” said George Barany, director of strategic initiative for America Saves, in a statement.

“This special moment in time then becomes an opportunity for employment programs, financial institutions, and America Saves to show young workers how to save and, more importantly, help them set up the systems to save automatically,” Barany says.

Give Kids Savings Tools, and They’ll Save Their Money is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Not so fast. You’re credit score is being checked by a bank before it allows you to open even a simple savings account. The bank wants to make sure you manage your credit well and that you won’t cost them money as a customer. It doesn’t want new customers, or any customers, to abuse overdraft privileges, have an unpaid negative balance, or have fraudulent activity on previous accounts.

Without at least decent credit, you may be denied service or asked to add a spouse or other family member to your account who has good credit.

Or it may offer you an account and a credit card, but the interest rate on the credit card will be a lot higher than it would be if you had good credit.

But applying for a credit card is another issue entirely. Opening a savings or checking account has its own problems if you don’t look out for them. Here are three things to check on before and while opening a bank account:

Is the credit data accurate?

In a recent report on the most common types of bank account complaints, the Consumer Financial Protection Bureau found that consumers frequently complained about consumer and credit reporting data used in screening for new accounts.

“Consumers complained that they learned for the first time of negative reporting information when they attempted to open a new deposit account,” the CFPB said in a press release.

Consumers also complained about having problems fixing errors on their reports that may have prevented them from opening an account.

Before going to a bank, check your credit score for free at one of the three major credit reporting agencies: Equifax, Experian and TransUnion. Or go to AnnualCreditReport.com for a free report every four months from each agency.

If you see any errors, fix them by writing the credit agencies. And if there aren’t any errors but your credit is still bad, start working on improving your credit score.

How much are overdraft fees on bank account?

Confusion about when money from a deposit is available was another big complaint to the consumer agency.

When a bank holds a check for a long time — even a few days — that can be frustrating when you need the money. It can be especially frustrating if you’re charged an overdraft fee because the check wasn’t credited to your account before a check you wrote based on the expected balance cleared.

What to do? Ask how much these fees are before you open an account, and exactly how much time is required for a deposit to be credited to your account. Are there steps you can take to avoid a fee, such as opening a linked checking account or making automatic deposits from your paycheck?

Once you open an account, keep a keen eye out for overdraft fees or other charges on your monthly statement and dispute them if you think they’re incorrect.

How are bank account errors resolved?

Checking for bank errors is one thing. Disputing them may be a lot more difficult.

The CFPB found that consumers frequently complained about the error resolution process for their deposit accounts. If an unauthorized transaction occurred or they believed they were a victim of fraud, then a bank’s response time was long.

Also, a provisional credit — where a temporary credit is applied to your account while a transaction is disputed — sometimes wasn’t provided, the CFPB found. That can leave you paying for the error or fraud until it’s fixed.

A bank account can be a smart place to deposit your paycheck, pay bills from and can help keep your financial life in order. But if you don’t do your homework before opening an account, you could face more problems than necessary in an effort to not be “unbanked” anymore.

3 Things to Question Before Opening a Bank Account is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Who wants to buy one car for the price of two? All you have to do is get a loan for six years at a 12% interest rate, and pay it off as scheduled. Gross, isn’t it?

Actually it’s compound interest. It’s bullish if you’re getting it, but a real beast if you’re the one paying it. Most people know about the magic of compounding investments, but it works the other way too. And just as some rates are better for investments than others, debts should also be avoided with certain interest rates, unless you enjoy doubling your debt.

Time isn’t the only factor, but it’s the biggest. The Rule of 72 is Einstein’s simple shortcut to figure out how long it takes for an interest-compounded value to double. It’s not exact, but it’s never more than half a year off. Just divide 72 by your interest rate, and there you have how long it would take for the loan or investment amount to double.

So 1% would take 72 years to double. 5% takes about 15 years to double. 10% takes 7.2 years to double. 20% takes 3.6 years to double, and 36% doubles in just two years. So if your loan duration is long, as in home loans, keep in mind it takes even less time for it to re-double (or quadruple). And it’s usually redoubling about half a year quicker for most good-credit rates.

As in the example above, if you’re buying a car with a loan (which is typically never more than six years), you want to stay under 12% interest to avoid paying double. And 12% is a magic number too, being the first to quadruple in almost two years less time than it took to originally double. Therefore, as soon as your interest rate is 12% or higher, your debt is growing at the fastest rate possible.

Bad credit isn’t entirely hopeless though. If you find yourself stuck in a position where you cannot get a good rate, you should then shop around for a loan that welcomes early payment. It’s more than avoiding early-payment penalties though. The loan should also get recalculated every time you make a payment on the date you made the payment regardless of due dates.

In other words, you can avoid doubling your debt if you can pay more often. Obviously paying more than your obligation helps too, but you can effectively cut up to 10 points off your rate just by dividing your monthly obligation into at least bi-weekly, if not weekly, payments. So if you have a $400 monthly obligation, paying $100 every week cuts back on the interest accrual, saving thousands over the course of the loan.

However, that only works if your loan doesn’t have a static monthly payment term. Talk to the underwriter or loan advisor about the terms of your loan. They will be able to tell you whether it is amortized on payment or on a specific date regardless of when you paid.

By the way, if you can’t get a used car loan under 12%, you should buy new. Legally, new car loans can’t exceed 8%, and you can still get an early-payment loan on that too.

Visit TheDollarStretcher.com today for 10 things you need to know about compound interest and what you need to know before you shop for an auto loan.

This article by Patricia Mayo first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

Source

The Rule of 72 is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.