When it comes to our basic money tools, most of us haven’t looked at them since we picked them. The majority of the people I talk to don’t really know what kind of bank account they have or what it costs.
There’s nothing wrong with that at all, but it means that lots of us aren’t really sure if we’re using the right tools.
Defining the ‘right’ tools
There is no ‘best’ bank account, and I don’t think you’re a terrible money person if you have fees on your account.
The purpose of this exercise isn’t to change everything about what you’re doing. It’s about taking the opportunity to look at your tools, see what they’re good at and what they cost … and decide if they’re helping you use your money the way you want to.
You get to make the rules. You get to decide if that fee is worth it to you or not. But in order to do that… you have to take a little gander at what you’re doing right now.
Looking at some basic tools
- Chequing accounts – great to use for money you need to spend right now
- Savings accounts – really good for money that you don’t need right now, but will need in the next 1 – 5 years.
- Business accounts – good for people who want to do business in a name that isn’t their name or have multiple people access the account
- Investment accounts – these are good for money that you want to spend in the future (a good rule of thumb is at least 10 years from now)
- Budget apps – good when you want to know exactly where your money is going
- Spreadsheet – good for people who want to write out all their information in a place that automatically does the math for them
- Envelopes – great for folks who don’t like technology and mainly use cash
I like to look through these for my clients and ask a few questions.
- What do you use this account for?
- What does it cost?
- What perks does it have?
You can find most of this with a quick google search. Take a glance and note down the things that apply to your life (no need to memorize everything, just find the perks and fees that apply).
It can also be interesting to take a quick gander at your statements and see if you regularly pick up any extra fees like overdraft fees, or extra e-transfer or transaction fees.
For credit cards, take a few moments to pinpoint that annual fee (if you have one) and figure out which month it comes out. Those can always be a surprise when they hit the balance. Also take note of your interest rate and how much your minimum payment is (if you have a balance).
Why should I spend my precious time doing this…?
I get it. This kind of basic tools audit is no ones idea of fun, but it’s information that so many of my clients really find interesting … and it’s pretty easy to do it on your own.
I sketched this out in 15 minutes.
It might help you find something that you’re paying for that you really don’t need, or plan for an annual fee that you forgot was coming.
Mainly it gives you the basic building blocks that will help you answer the question – does the way that I use money work for my life? Is it making things simple and clear…. or are there some things that are jumbled.
If you’re interested in sketching it out like I did, here’s a BLANK VERSION of that worksheet.
Rags to Reasonable Community Outreach Coordinator
Emily Nixon is an actor/writer/director/filmmaking Swiss Army Knife. She is also a big money nerd and Community Outreach Coordinator for Rags to Reasonable.
She came to this work after becoming completely fed up with living paycheque-to-paycheque and being too afraid to look in her chequing account. She is passionate about empowering other artists and variable income earners to keep doing what they love and feel confident about their finances.
Email Emily at email@example.com