Think back to April 2020, and you’ll remember that the government sent out millions of stimulus checks while the unemployment rate also hit a record high. Funds from the government are usually given out as paper checks or electronic deposits. To people who had a bank account, getting this money was not a problem; it happened instantly. But, those people who did not have or use a traditional bank account had to pay to receive their money.
Today, we are still working through a global pandemic, and we can expect more stimulus checks to come. While this isn’t the only reason to open a bank account, it’s a good reason to start considering it. Even if you live paycheck to paycheck, there are many different reasons why having and using a bank account is important. Below, we go over some of the main reasons a bank account can help save you money and give you financial security.
Easily Save & Budget Your Money
When you have a bank account, you can pay bills and other expenses by check or through online bill pay for free. You won’t need to pay for money orders, use costly check-cashing outlets, or worry about unnecessary fees to have money wired.
With a bank account, you can also have a savings account, where you can put any extra money away for emergencies. You even get monthly bank statements that prove you paid your bills. These statements are great because they explain how much money you have spent and what you spent it on.
Bank statements can help you get a better grasp of your finances, which makes saving a lot easier. Not to mention, having a good understanding of where your money is going each month will help you be more conscious about where and how you spend it. It’s easy to spend $6 on a fast food meal and not think twice, but when you go back over your bank statement, you may notice that you can spend that same amount at the grocery store and make a whole week’s worth of meals instead. A bank account helps you better understand how you are spending your money.
Benefit from Direct Deposit & Auto-Billing
Direct deposit and auto-bill pay are not only convenient, but they work to keep you on track financially. It’s a game-changer, really. Direct deposit ensures that checks from your employer are sent directly to your bank account. You will get your money immediately, and won’t have to worry about going to the bank to get your check cashed (or potentially losing the check or cash.)
Auto-billing is a tool many people with bank accounts use to make sure their bills are always paid on time. You can set up scheduled payments with your bank so that your money is automatically withdrawn from your account and sent directly to whoever you owe money to. Just make sure you have enough money in your account on those days so you can pay your bills without any worry. Auto-billing can also help improve and build your credit since paying bills in full and on time creates a healthy financial record.
Keep Your Money Safe
If you have a bank account, you don’t have to worry about carrying around paper money that could potentially get lost, stolen, or ruined. A debit card can easily be replaced or canceled if you run into issues, and you can typically use this card anywhere cash payment is accepted. And if you do end up needing cash, banks have ATMs available, so you can use your debit card to withdraw money whenever you want without any transaction fees.
Better yet, the money in your bank account is insured by federal law. This means that if something happens with your bank or they go out of business, you will still get all of your money. It’s true! A bank account helps keep you and your money safe in many important ways.
Getting Started
Now that you understand the value of opening a bank account, we’ll help you find the right bank account for your unique needs. Please note: not all banks are created equal, so it’s important to know your options before you take the leap. Here are some great resources that focus on low-cost and low-income banks and credit unions:
- BankOn: BankOn is on a mission to make sure everyone has a safe and affordable bank or credit union account. They collect a vetted list of low-cost bank accounts that can be opened online and matched to your unique preferences.
- MyCreditUnion.gov: This website gives you access to low-income designated credit unions, which are often better at helping people who need low-minimum balance accounts and small-dollar loans.
- Independent Community Bankers of America (ICBA): ICBA offers a list of community banks that allow you to open bank accounts remotely and with a $0 starting balance.
- Nerd Wallet: Nerd Wallet is a website that offers expert money advice for free. Check out this article that goes over the 10 best free checking accounts you can open today.
What You Will Need to Open a Bank Account
While every bank or credit union will have its own protocols for opening an account, here are some things you may need to have handy to make the process as smooth as possible:
- State-issued identification card or drivers license
- Social security number (or equivalent)
- Passport or other country-issued identification (if applicable)
- Contact information
- Date of birth
Our Financial Coaches Are Here to Help
At Mary Rigg Neighborhood Center, our financial coaches work hard to make sure our community is set up with the resources they need to thrive. During difficult times, every penny counts. If you’re through wasting money on check cashing and other non-traditional services, consider talking to us about opening a low-cost bank account. We look forward to helping you accomplish your financial goals.