Back to Basics: Building Strong Financial Foundations

Financial success doesn’t happen overnight. It happens over time, as you take consistent steps to boost your financial knowledge, develop good habits and improve your wellbeing. 

From opening a first account to planning for long-term financial goals, understanding the fundamentals of money management can set you up for long-term success.

In this guide, we’re covering two basics that almost everyone uses and needs: checking accounts and credit.

Your Checking Account, Your Financial Hub

You may be wondering why you need a checking account when writing paper checks has become increasingly rare. However, your checking account is where you keep your money day to day. 

It’s the home base for your finances and likely the place where you make the most transactions. 

• You probably have your paycheck deposited into your checking account 

• You pay utility bills, rent or mortgage payments from your checking account 

• You may use a debit card for everyday purchases like groceries

That means a lot of money and a lot of transactions are flowing through your checking account daily. 

You may remember watching your parents balance their check book and use a check register. In fact, you may have even done it yourself! Now, digital technology makes it easier to manage your accounts and finances through online banking or mobile banking, so you can review transactions and monitor account status. You can even set up alerts to ensure you know when big transactions are processed or when checks clear. 

How to Manage Your Checking Account 

Checking Basics #1: Monitor your account regularly.
Digital technology makes it easy to keep a close watch on your accounts, so you can be aware of your balances and spot suspicious or unauthorized activity. 

Checking Basics #2: Schedule Direct Deposit 

Have your employer deposit your paycheck directly to your checking account. You’ll avoid the hassle of making a physical in person deposit and you may even be able to receive your check up to a day early. 

Credit Basics for Building a Foundation 

Credit helps you make the big purchases you need in life. However, to be prepared to make those purchases, you often need to prove your ability to manage credit successfully. 

We have a full guide to managing credit with confidence on our website. Your credit score can affect your ability to buy a home or a car, but you may also have your credit checked before you can qualify to rent an apartment. Some jobs (like those that involve handling money) can also include acceptable credit as a requirement for employment. 

Your credit score is the number that will be considered as evidence of your creditworthiness. If you have outstanding credit already (800 or above), congratulations! If you still have some building to do, these tips can help. 

Credit Basic #1: Start small and build gradually.
If you need to build credit, a low-limit credit card or a secured card can be a great place to start. Your secured card has a deposit securing your transactions, so you can make purchases and build a strong history of making payments. 

Credit Basic #2: Always pay on time.
Payment history is one of the most important factors in your credit score. You can set reminders to make your payments in a timely manner or even schedule them in advance, so your payments will be accurately reported to the bureaus and reflected on your credit report. 

Credit Basic #3: Keep balances low.
Just because credit is available to you doesn’t mean you have to use it. When you keep your balance low compared to your total available credit, you show that you’re capable of managing expenditures, which can help increase your credit score. 

Building a Financial Foundation Starts Small 

You don’t map out your entire financial path and achieve all your goals in a day. Instead, focus on making small consistent improvements to your financial decision making and processes. 

Some easy ways to get started include: 

• Building a simple budget. You don’t have to account for each dollar down to the penny in advance. Instead, start by tracking your spending to know how much money you have coming in and how you’re spending it. You can optimize your budget once you have a good grasp on where you stand. 

• Save consistently. Even a few dollars a month can add up! Consider setting up automatic transfers from your checking to your savings, so that you don’t even realize you’re putting money away. 

Above all, know you don’t have to do it alone.  Our Andrews Federal team is here to empower you with the tools, knowledge, and support you need to succeed. When you’re making financial decisions, it’s our pleasure and privilege to guide you, whether you’re setting up a first account or applying for a first loan.