Fico Help Central

One of my passions is making sure everyone receives a financial literacy education. Unfortunately, most school systems just doesn’t teach the basics. This means when we enter the world as adults, unless someone has taken us under their wing and taught us what we need to know to manage our personal finances, we start off at a huge disadvantage. For instance, can you Balance a Checkbook?

Most adults either cannot, or choose not to. The reason I am given for why not is because they claim they can just find out their balance by logging in to their account online or going to the ATM. This lack of understanding of how a checking account works could cost you a lot of money in overdraft or insufficient fund fees, and it proves that people can benefit from some basic education.

What do I mean? When you write a check or make a payment online, your bank does not immediately deduct it from your balance. First, the Payee must process it, and then submit it for payment to your bank. Depending on how organized the Payee is, this could take 3-5 business days before the check clears your bank. If the Payee is simply a person, who knows how long they could hold on to the check before they deposit it (i.e. your daycare center, hair stylist, etc.).

So let’s say on Monday you wrote a check for $50 to your son’s school to pay for some pictures. Then on Wednesday, you check your balance online and see you have $175. So you go to the ATM and deduct $150 in cash. You figure you have $25 left in your account, right? But now on the same day, the $50 check finally clears your bank, and you are -$25, so your bank hits you with fees.

If you had simply kept a journal log in your checkbook, deducting any withdrawals and adding any deposits, and balanced that each month, you would not count money that had not cleared yet as being available. This one technique could save you hundreds of dollars a year, and only takes 15 minutes a month to perform.

To learn how to Balance a Checkbook, see my article to learn how. You’re never too young to learn something new - make Financial Literacy Education a passion of yours!

To learn more about how to dramatically Improve your Credit Score, visit my website at www.ficohelpcentral.com.

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