Basic Banking Information Every 20 Something Must Know

Financial matters like banking relate to our everyday life in one way or another. Banking is also an important matter when you start planning to achieve life’s milestones, like buying a house, travelling around the world or starting a family.

Banking makes up part of our lives and the more you know your account, the more chances you have to be financially successful and overcome any financial mishaps.

Things you can do through banking

Banking products range from savings accounts to all types of loans. You can choose not to use them, but you´ll have much more control over your finances if you go with bank products with low fees attached.

Take a look at your current circumstances and decide which banking service suits your lifestyle and how likely are you to pay for those services. Main banking services include:

  • Make payments and transfers: You can save a lot of time when paying bills and other obligations online. If you have a current account you will be able to write checks against the money you have in the bank. You can also purchase items through the use of debit cards. Your employer can make your wage deposits into your current account and you can have a saving account attached in order to make automatic deposits and start building saving habits.
  • Earn interest: Lenders have accounts available for you that actually gain interest over time, meaning that the initial amount you deposit will grow over time due to interest paid to you by the bank, of course, they will offer slightly reduced interest rates, but still, you’ll be making more money.
  • Loans: That’s what banks do, they lend money. They offer loans if you want to purchase a house, a car, lines of credit. Credit cards are also loans from the banks.
  • Store your money: Banks will offer several options for you to store the money you’ve earned. Since most transactions right now can be performed online, you’ll be saving a lot of time.

Account types:

  • Savings account: As the name entails this account is used to save money. You put the money in, the bank pays you a little interest in it, and you can transfer the funds or withdraw them as needed. They’re designed for people to save money, so if you try to use them as checking account you may encounter some limitations.
  • Current accounts: This is for your everyday spending, so you can swipe the card to purchase things, pay bills online, authorise automatic withdrawals from creditors and to buy things online.

How to open a savings/checking account:

Opening a bank account is not a complex process, actually, all you need to do is provide the right documentation and start using it. Explore all the banking options, from the big banks to the smaller ones. Keep in mind that smaller banks tend to have a more community/oriented approach so they’ll be more flexible for some procedures.

Usually, they ask for personal details, an ID and address information. In addition, they will ask for other information such as employment status, income and many more. If it’s your first time opening an account we suggest you go directly to a bank branch.

This is for when you open an account, now, if you’re applying for a loan they may ask for more sensitive information and may require documentation that backs up the information you give them.

If you’re looking to establish a good relationship with a lender, make sure that you follow their guidelines properly. If you’re approved for a loan, strive to always make payments on time with utmost responsibility, be careful of fraud risks and don’t borrow too much, keep everything within your limits.

This is basic banking, as you grow old and gain experience you’ll witness a lot more banking stages, like mortgages, insurance and major loans, but for now, try to build good and solid saving habits and keep a steady income. If you find yourself struggling for ways to boost your income for you and your family, maybe you can investigate if you or a family member was affected by mis-sold insurance policies in the past.