6 signs you're behind the financial times
July 16, 2014
There's a lot to be said for tried and true financial practices. However, many of the money habits of your youth may have outlived their usefulness by now.
If any of the following statements ring true for you, it may be time to seek easier, more convenient or more profitable ways to manage your money. Here are six signs you're behind the financial times -- and why you might want to catch up.
1. You still prefer checks
So you write still checks at the grocery store? You're certainly not alone, but that doesn't mean it's wise.
"Certain people still love to write checks," says Keith Klein, CFP and owner of Turning Pointe Wealth Management, a Phoenix-based firm serving clients nationwide.
Rather than fumbling for a pen in the checkout lane, why not swipe your debit card instead? Money pulled from a debit card comes from the same place as the funds for your check, but using your card offers a few distinct advantages. Most banks and merchants offer free debit card transactions -- saving you the cost of checks -- and choosing this payment method allows your transaction to show up more quickly in your electronic records. Even better, you probably have built-in fraud protection on your transactions if your debit card sports a Visa or MasterCard logo.
2. You ignore online bill payment services
Bill pay services are a beautiful thing. They make it simple to pay for everything from the mortgage to an eBay auction item.
"Online bill payments can be done automatically or one at a time," says Tim Shanahan, explaining why they can be used for virtually anything.
Shanahan, president and chief investment officer for Compass Capital Corporation, an investment firm in the greater Boston area, suggests you look beyond your financial institution to non-banking payment options as well.
"PayPal is virtually riskless and instant," Shanahan says. "It makes so much sense if you have the account and your counterparty has at least an email address."
3. You are scared to bank outside of the branch
You're making your life harder than it needs to be if you refuse to bank outside of the presence of your favorite teller.
"Some people refuse to use an ATM," says Klein. "Maybe it's a fear of getting robbed or the fear of not being face-to-face with a teller."
It's hard to find updated data regarding the number of robberies that occur at ATMs each year, but a 2002 report from the Department of Justice pegs robberies at one per 3.5 million transactions. So the biggest thing you realistically have to fear at the ATM is the outrageous transaction fee you may be charged.
Besides, there are plenty of other ways to bank without using a branch or the ATM. You can even deposit checks at many institutions by snapping a photo -- a method Klein says makes sense since it is basically what banks do to process physical checks today.
4. You maintain a bottomless pile of paper statements
Keeping accurate records is essential for sound money management, but that doesn't mean your financial statements need a room of their own. Rather than storing physical statements, scan and store them in the cloud. Even better, ditch the paper statements completely and have them sent electronically.
If you use a financial firm to manage your accounts, check to see if they'll do the legwork for you.
"We aggregate everything, whether (our clients) do their investments with us or not," says Klein. "Then when they need a mortgage or loan, we can fill out an application in five minutes."
5. You pay someone to do your taxes
Another old-school financial practice Klein says many people can ditch is paying someone to do their taxes. They could use tax software instead.
"Accounting software can let many people get their tax return done for free," he says.
Of course, those with complex tax situations may want to hire a pro to navigate the tax system for them. But if you only have a W-2 and an annual income less than $58,000, you should check out the Free File options on the IRS website.
6. You haven't shopped for better rates since ... um ...
Whether we're talking about your mortgage or your savings account, interest rates can change radically over the course of a few short years. A mortgage may take some work to refinance, but there's no reason to leave your money in a savings account that pays 0.01 percent annually in interest.
"With Internet log-ins available on virtually all bank accounts, it's easy to move funds either in real time or on a scheduled basis from checking to interest-bearing money market accounts," says Shanahan.
However, to make the most of your money, you'll have to get over your need to visit a branch, Shanahan says.
"Most of the highest rates are paid by Internet-only banks that do not have to support the cost of a branch system," he says.
Being old school may work if you're Converse shoes or the Rolling Stones, but your finances are different. Dumping the outdated money management practices of your youth can help you discover easier and more profitable ways to handle your funds.
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