I remember receiving my first paycheck postcollege — along with my first checking account fee. While you're a student, many banks will prompt you to sign up with a free checking account, but things change when you graduate. I was startled and annoyed at this fee, but little did I know the few years preceding college, I would rack up several others. Here are five important things you should be aware of when banking in your 20s.
- Know the fees associated with your account. Ask what types of fees to expect and how you can avoid them. They creep up, and your bank might not prepare you for new fees either. For instance, large banks like Bank of America are instating monthly fees for debit card usage. While charges are between $3-$5, it's still a pretty significant fee for debit card users.
- Your purchasing habits are stored. In the ever-connected modern day world, purchases made by debit and credit cards are stored and analyzed. This might not mean a whole lot to you in terms of your debit card usage, but companies could use the data to determine your interest rates for credit cards. Keep that in mind if you tend to make not-so-responsible choices like purchasing huge items spontaneously or blowing your paycheck in a 24-hour period. Otherwise, opt to make more cash purchases.
- Limit the amount of transfers you make. I had a lot of savings from working during college, but I quickly drained those resources in the real world and racked up killer transfer fees. Banks obviously want you to keep your money in the bank, so budget yourself before you transfer money out of the account. This way you aren't forced to pay more fees than necessary.
- Save, save, save! In your 20s, it's a day-to-day financial struggle; I get it! While it's difficult to think about the future or prepare for natural disasters, accidents, or injuries — they happen! Be adamant about setting aside a certain amount every paycheck. Shoot for 10 to 15 percent, but anything is better than nothing, even if it's $20.
- Check your checks. Debit card purchases appear on your account immediately, whereas checks can take up to a week to be cashed. In that time, the lattes add up; the account is drained; and it's a pain (and financial drain) to deal with a bounced check.
- View your account history daily. Save your receipts and double check the charges on your online banking. There's nothing worse than a hefty overdraft fee due to negligence. Everyone makes mistakes, but you're better off (and richer too) if you're the one catching them.