(The following is a guest post)
Do you remember deposit slips? Do you recall those days when we had to physically enter a bank to make most transactions? Are you old enough to know a time when ATMs represented the most digital and sophisticated that banking technology ever got?
If yes, you can probably envision that era in the not-too-distant past when online banking had not yet gained prominence. Thanks to this ability to manage and monitor one’s bank account online, the need for many physical elements of personal finance – elements such as check books, deposit slips, and banks themselves – is becoming increasingly less necessary in the face of virtual capabilities. A person who uses a major commercial service like Discover can now check their statement, pay their bills, and transfer funds all without leaving their desk.
There are clear benefits inherent in this new technology, and there is no question that online banking offers numerous advantages that traditional approaches cannot even begin to match. But, as with any new advancement, the benefits here come with some potential drawbacks as far as an individual’s personal finances are concerned. If you are an online banking aficionado, here are a few main tips to keep in mind so as to avoid some of these drawbacks:
Keep a checkbook
With checking and savings accounts always at your fingerprints, it is easy to go online and see if a check has been posted. Perhaps it’s too easy, because more and more people are doing away with checkbooks and simply choosing to “eye” their account on a regular basis. This may work for some people, but it could also lead to overdrafts and let certain errors go unnoticed. Simply keeping a traditional checkbook can go a long way towards avoiding such issues.
Forgo online bill pay
For many people who use online banking, the major benefit it offers over traditional services is the ability to pay bills virtually online. Instead of finding your checkbook, grabbing a stamp, and having to walk to the nearest mailbox, you can simply click a couple buttons and make your utility or insurance payment through electronic means. There’s just one problem: without the tangibility of receiving a bill in the mail and writing out a check, people can start feeling less “connected” to their major expenses and freer to spend more. If this sounds like something that might happen to you, you may want to forgo the online bill pay and stick to the pen and pencil method.
Set money transfer rules
Inner-account money transfers represent another category where online banking may be too easy and convenient. With online banking, a user can easily move money from a check account to a savings account or vice versa. This means that money set aside (savings) can be easily converted into spending cash (checking). Setting limits on your transfers (or prohibiting yourself to transfer from savings to checking in the first place) is a good way to avoid this problem.
Following these tips can help you avoid some of the few drawbacks of online banking by making you more accountable for your money. In this manner, you can reap the convenience of the internet without suffering from its dissonance, in the process truly enjoying the best of both worlds.