Bank online, save trees (and money)
I love when companies exploit our concerns about the environment to sell services. In its January newsletter, HSBC Bank says if all U.S. households paid their bills online, it would save 16.5 million trees and eliminate four billion tons of greenhouse gases. Bill pay, the newsletter says, is a great way to reduce paper use “while also saving time, money and eliminating unwanted clutter.” Its online service can also slice, dice, chop and make julien fries. Just kidding. (Anybody remember that commercial?)
In this case, environmental concerns do jibe with smart money management. Two-thirds of adults already bank online, and frankly, everyone should. Just make sure your bank isn’t charging you for the privilege – most banks offer free online bill pay with their basic checking accounts.
Here’s a how-two for novices:
There are several ways to set up online bill pay, but the easiest is to go through the bank where you opened the checking account. The bank will give you a login and password; sometimes you have to choose a new password when you login for the first time.
Then it takes all of 15 minutes to set up. Just find your major bills from last month. For each bill you pay every month, you click “add a new payee” (or a button similar to this) and fill in the form that appears with the company name (Acme Electric, etc.), address, phone number and your account number. When your bill comes in and says it’s due in three weeks, you jump online, tell the bank what date you want the bill paid and click. (It’s best to leave at least three days before the actual due date—not including weekends—to make sure the electronic payment goes through on time.) Write the date and amount of the bill in your checkbook register. You’re done.
No checks to write, no stamps to buy, no random utility bill diving into the bottom of your desk to be discovered floating there months later.
Alternately, you can use one of the fast-growing third-party sites to set up online bill pay, and simultaneously tap into services that help you budget. I don’t use these services; I use a cheap, no-fee checking account linked to a separate online saving account that yields about 4.5%. I do my budgeting through the online program Mvelopes. Would love to hear from readers who find the third-party sites offer a big advantage.
Like most people, I no longer balance my checking account to the penny. Here’s what I do instead: I’m extremely careful about recording all my deposits and the bills I pay in my checkbook register (whether I pay them online, write a check, use my debit card or get cash from an ATM). Then every month (sometimes more often) I go online and compare my handwritten register to the transactions listed online, to make sure our lists match.
Meanwhile, if you’re a debit-card junkie, putting dozens of transactions on the thing every week, stop it! Start using cash. Studies show that when you use plastic, you’re far more likely to overspend.
How do I keep from overspending and bouncing checks? I have a really good handle on what my life costs every month, and that’s the amount I keep in the account, with a few hundred dollars in slush money in case of an unexpectedly high utility bill or a spontaneous weekend away. If your expenses fluctuate wildly from month to month (by several thousand dollars), then it’s worth the time to balance your checkbook to the penny.
The key is to painstakingly record any inflows and outflows in your register. Add up all the money spent (checks written, bills paid online, cash withdrawn from ATMs, transfers made to your savings or other accounts); and inflows at the end of the month (your paychecks), and subtract one from the other. Take this total, and if you spent more than came in, subtract it from last month’s balance. If you earned more than went out, add the total to last month’s balance.
It’s pretty simple. The only tricky part is stopping to write all of these transactions in your checkbook. When using the ATM, try to take out the same amount of cash on a weekly basis only, to minimize the number of transactions.
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