One of the first steps toward real freedom (and adulthood) is having checking and savings accounts in your own name. These accounts allow you to save money, make purchases, and pay bills efficiently. Both, however, require you to take an active management role, so that you can achieve your goals and avoid errors.

Start a savings account

Getting into the habit of setting money aside regularly is the foundation for a successful financial future. If you have a regular paycheck, be sure to sign up for an automatic transfer of funds from your checking account when you open the account. Once done, saving will be a breeze. All you have to do is choose the amount you want deducted regularly from your checking account and deposited into your savings account.

If you save a portion of every paycheck, it won’t be long before you accumulate an impressive sum.

Managing a checking account

After you open your checking account, it’s your responsibility to handle and monitor it correctly. This means knowing how much is in your account, reading your statements for accuracy, and never writing checks, making an electronic payment, or swiping your debit card for more money than you have in your checking account.

Avoid spending more money than you have in your account:

Overdrafts and returned payments are serious and expensive business. An overdraft or returned payment can occur if you don’t have enough funds to cover a payment you authorize. You could be charged an overdraft or insufficient funds (NSF) fee by your bank, and merchants may charge you fees in some cases too.

You can also avoid these fees by always knowing how much you have in your account. You can use mobile banking to check your balance before spending but keep in mind that pending charges can affect your balance, and any paper checks you write will not show up in mobile banking until they are cashed. Never write a check before you make a deposit, counting on the “float” time. A check can clear the financial institution the same day you write it.

Keep your account balanced

Always read your account statements (or log in to online/mobile banking) and compare your balance with what the financial institution says you have. If there is an item on your statement you don’t recognize, first determine if it’s accurate. If you believe the item is wrong, contact your financial institution to have it investigated immediately.

Using your ATM/debit card

When you open your checking account, you may be issued either an ATM (automated teller machine) card or a debit card. There are differences between the two:

• ATM card. You can use an ATM card to withdraw cash, make deposits, transfer money between accounts, obtain your balance, etc., without having to go into a branch and speak with a teller.
• Debit card. You can use a debit card at a store or restaurant as well as the ATM. It may look like a credit card, but it is not; money is automatically deducted from your checking account when you use it.

Whichever card type you have, be very careful with where you keep it and how you use it. Memorize your personal identification number (PIN), never share your card, and contact your financial institution immediately if it’s lost or stolen.

Managing all your accounts well is important. If you do, you’ll always have the security a savings account brings, and you won’t waste money on checking account mistakes.