Tuesday, July 12, 2005

Rule #2: Online access

  • Use online access for all your banking, investment and credit card accounts
This is another thing that really changed my financial life. Probably a no-brainer for most people by now, at least anyone who might be reading this site, but it's so much easier to be able to access bank accounts, investments, credit cards, etc. online. No more paper statements causing clutter and having to be shredded. I have repeating transfers set up between savings and checking to cover regular bills, and I save the cost of stamps by paying bills online directly from my checking account. And I time the payments and transfers as close as I can to the due dates, so I can maximize every one-millionth of a penny of interest I can earn in my savings account (and feel like I'm socking it to The Man).
I have a repeating reminder in my calendar to make sure I download and reconcile everything at least monthly, though I tend to download credit card transactions weekly. Again, it's seeing the spending and being able to analyze it easily with Quicken, that really motivates me to try to change my habits. Most major banking and investment institutions offer account activity downloads in Quicken's format, as well as Microsoft Money.
Online access has also particularly made a difference in how I understand my investment and 401k accounts, and really keep track of how they are doing vs. my bank accounts-- a good prompt to reallocate assets if they're not earning what they could be.

11 comments:

tmwhalens said...

This is a very good idea. My wife and I are trying to bring our idea of managing our money, to fruitition.

In Recovery said...

Unless your bank has an online problem and you can't log in! (as happened this week with Washington Mutual...)

RemarriedWithKids said...

Question for Madame X:
Even though I am a long-time Quicken user, I find it hard do track by investments on it. The one time I checked, the returns Quicken gave didn't seem to match what the mutual fund paperwork said. Since then, I keep plugging the info into Quicken, hoping to some day figure it out. Is there a better way?

Madame X said...

Remarried-- I'm actually not sure. i've had the same problem where returns aren't exactly the same. I do try to make sure I capture every single transaction correctly: dividends, interest, capital gains. I think I'm usually pretty close to what my statements claim, but maybe they sometimes calculate things slightly differently? Sorry I don't have a better answer!

Erik said...

I would suggest caution with repeating transfers between Savings and Checking accounts. Reg D means that bank have to charge a fee for excessive electronic transfers from your savings account. Repeated violations of Reg D will usually lead to a bank closing your savings account for fear of the bank being fined or worse.

Ruthann said...

Have you ever thought about using a web-based personal financial manager? I use Geezeo.com to track my money, budget, etc. It's free, safe, and simple... which means I'm less stressed about my finances (thank goodness!!)

stephanie said...

I use wesabe.com

bugbear said...

I also do most of my banking and billpaying online, on my bank's website.

However, I have made the decision to "step away from the edge" from financial stress and by scheduling all payments within a couple days of when they are billed, as opposed to paying them close to their due date. It gives me peace of mind to know that everything is paid about 20 days before they are due. The interest lost from this is really quite minimal if you calculate it out.

Also, I have a financial "dashboard" that I run on accrual terms: it shows me how much money I have available to spend accounting for all expenses as they are incurred, often even before they are billed to me. Doctor Bill/copay that I'll be billed for in about 30 days? I estimate it and enter it today into my dashboard and the available cash reduces by that amount. I mark the entry as "pending" and "estimated" and when I get the real bill I adjust it. But this way I never have an overstated sense of how much cash I have available, so I can be very secure about what I can afford or not afford.

Thrifty Gal said...

I personally am nervous about doing too much personal stuff on-line because of hackers. I just saw tonight on "60 minutes" a segment on this. However, you can also save money on postage by arranging to have your bill payments deducted directly from your bank account, or go to your credit card. I do this for 4 bills each month, then pay my credit card bills via phone. No worries about hackers!

Differences Pay said...

I am just starting to use online banking for bill paying. Do you suggest starting with ulility bills.

Madame X said...

@Differences Pay-- I think utility bills are a great place to start, as most banks already have the utility company info in their systems and the payment times are usually a 1-day turnaround.