The Ultimate Guide to Personal Financial Wellness

Planning and budgeting may seem tedious or stressful, but the peace of mind you’ll have when you know where you’re money is going (and how much you’re saving) is priceless. We’ll go over the basics and give our best planning and budgeting recommendations and money-saving tips, so you can enjoy the relief of financial wellness. Let’s get started...

Bank Account Management 

Before we get into personal bank account management, it’s good to have an understanding of how banks work. 

Banks are very different from other businesses. Essentially, banks pay their customers to lend them money which is used to create loans and other lines of credit. Banks earn interest on those loans, and pass some of the profits on to their customers by paying interest on the money they have stored in the bank—frequently in savings accounts, but often in checking accounts too.

What does that mean for you? It means that banking is a mutually beneficial transaction, and you deserve to reap the benefits of being a bank account holder.

Choosing a bank account

Bank accounts are not “one size fits all.” Banks offer a variety of accounts to suit their customers’ unique needs. What is the right fit for you? Here’s a breakdown:

CHECKING ACCOUNTS

Checking accounts are the most accessible of all bank account types. With a checking account, you’re able to deposit and withdraw money as needed. Deposits can be made in the form of cash, paper checks, or automatic transfers. Cash can be withdrawn, transferred, or spent on items using checks or a debit card.

There are several varieties of checking accounts:

• Basic checking accounts are the most commonly used checking account. Typically, this kind of account has few restrictions on balance minimums, number of transactions allowed, etc.
• Business checking accounts have features such as multiple debit cards for employees and extra security precautions.
• Rewards checking accounts offer earnings on money stored within the account. Rewards checking account interest rates average between .04% and 1%. Some rewards checking accounts have an even higher APY (annual percentage yield). 
• Joint checking accounts can be accessed by multiple individuals, such as a couple who share finances. The benefits of a joint bank account are that you can easily track household funds and simplify your budgeting efforts.
• Student checking accounts cater to first-time bankers such as teens and college students. These accounts tend to have fewer fees than basic checking accounts and low (or no) minimum balance requirements. 

SAVINGS ACCOUNTS

This type of account encourages you to leave your money in the account. One of the benefits of saving money is that you can earn interest. As outlined earlier, banks rely on customer deposits to fund their business activities, so they will pay interest on money that is held in their accounts. Similarly, savings accounts are structured to discourage withdrawals.

Here are the most common types of savings accounts:

• Basic savings accounts are simple accounts that offer moderate APYs and limit withdrawals.
• Money market accounts offer more freedom on withdrawals and spending, but typically have high minimum balance requirements

Certificates of Deposit (CDs) pay more in interest than basic savings or money market accounts, but have more restrictions. With a CD, you’ll agree to lock up your money for a period of time (or pay a penalty for early withdrawal)

Your bank account becomes ground zero when it’s time to manage your income, expenses, and savings. What is personal banking’s role in budgeting? Our financial experts at Vast Bank have a few tricks to share on how to budget and save money using bank accounts.

Structuring your bank accounts

For this budget management method, you will set up THREE different accounts:

• A checking account for income and fixed expenses. This is where your paychecks will be deposited and where you’ll pay bills such as housing, utilities, etc.
• A savings account to pay yourself first. It’s easy to see why saving money is important. This account can cover short-term goals (such as purchasing a home or car), upcoming travels, taxes, or emergencies that may arise. This can even be a family savings account, where your household all contributes to the same savings goal.
• A separate checking account for spending. Use this account to make discretionary purchases, like entertainment or clothing, and variable-cost purchases, like groceries.

3 benefits of using bank accounts to manage your finances

1. You’ll prevent expensive overdraft fees and minimum balance charges: This budgeting method helps ensure that you have enough in your checking account for recurring bills and maintain the proper minimum balance in your savings account.
2. You’ll learn how to use a savings account: Saving money is perhaps the most underutilized budget-booster. Socking away even a small amount per month helps negate expenses later, such as late payment fees or overdraft charges. 
3. You can spend money guilt-free: What a joy it is to make a “just for fun” purchase with full confidence that it won't disrupt your budget later! Having one debit card JUST for discretionary spending and variable expenses takes the guesswork out of it.

Budgeting isn’t just for tough financial moments. Effective budgeting enriches the present and the future by giving you control over your financial wellness. The key is to stop procrastinating, and start budgeting! 

Let’s get started:

Note your income

The first step is to take stock of what you have coming in. Your job, any side gigs, child support/legal payments, inheritance funds, annuities, etc., all fall under “income.”

Make a plan

What do you want to accomplish in the next 3-5 years? Set measurable goals, such as “buy a house,” “save $8,000,” or “pay off my debt.”

Monitor spending

Using the three-account system above, keep an eye on the money leaving your accounts. Is there a utility bill that’s higher during certain seasons? Are you spending most of your discretionary income eating out? There are always adjustments to be made to enhance your financial wellness.

Automate bills

Setting up your bills to be automatically withdrawn can save you time AND money. Rather than manually paying each bill, choose autopay or bill pay features to pay for things like car notes, student loans, phone bills, etc. This will help you avoid late fees and will ensure that necessities take priority in your budget.

Utilize online banking tools

We’ve come a long way since the days of pen-and-paper budgeting and complicated spreadsheets. Budget apps can enhance your planning experience by helping you categorize your spending and making recommendations to improve your financial wellness. 

Here are several popular apps for budgeting and saving:

Budgeting apps that sync with bank accounts

Mint, one of the most popular budgeting apps, links with your bank account to provide real-time budgeting updates and bill due date alerts. 

Budgeting apps for teens

FamZoo teaches teens about budgeting—with oversight from mom and dad. Teens can set goals, earn money, and track transactions. Unlike Mint, this app doesn’t integrate with your bank account, and there is a monthly fee for use.

Budgeting apps for couples

You Need A Budget (YNAB) syncs with your bank account and provides real-time access to financial goals and information from any device, making it easy for couples to coordinate saving and spending. The app also offers in-depth reporting and regular financial workshops.

Budgeting apps for personal AND business use

CountAbout syncs with your bank account, 401(k) accounts, AND Quicken software to create an all-inclusive budget management system for small business owners. It even has invoicing capabilities.