Episode 5a: Money, money, money: Storing your money safely, and how to pay for things

Not all Americans are careful with their money; but those who are most successful generally make good decisions about spending and saving money.  

Here are five things you need to keep in mind about money as you start your new life in America.

1.      You will need a job as soon as possible.  The government benefits you are receiving now are time limited. Having a job puts you in charge of your own destiny.

2.  You need to find a bank where you can conveniently access your money.  Get one which is close to where you live or work and which has a good reputation for friendly customer service.

3.  American banks are insured by the government for $250,000, so you don’t need to worry about losing your money if it is in a bank or credit union.

4.  As soon as possible you need to start saving some money every month.  This way you are prepared if there is a family illness or if you need to buy a car or some other large item.

5.  You will need to build up your credit score so that you can borrow money when you need to.

It would be logical to talk first about how Americans make their money.  But we’ll be talking about that later, so let’s start with how they buy things and pay for things. Americans spend  their money using cash, debit cards, credit cards, and sometimes checks.  Debit cards and credit cards look alike, but debit cards are only good for the amount of money you have in the bank.  Using cash, debit cards, and checks is in some ways safer than credit cards because with them you can’t spend money that you don’t have. Credit cards may give the illusion that there is unlimited money; but it is not unlimited. For routine monthly bills like your cell phone payment, you can authorize the bank to pay for these with an automatic transfer of money from your account.

On the other hand, credit cards allow you to buy something and then pay for it the next month   Credit cards have a limit of how much money you can owe on them.  Every month you have to make at least a minimum payment. You are charged a certain amount of money for the amount that you do not pay off.  This is called interest.  Interest rates vary, on most credit cards it is high.  Therefore, it is wise to pay the full amount due on the credit card every month so that you avoid interest charges that can quickly mount up.

With your first credit card, the limit you can owe on a card may be tied to how much money you have in the bank.  Later, however, the credit card limit may be well above what you have in your bank account.  One danger is that it is easy to start paying for things with a credit card and to get “over you head” in credit card debt.  That means that you may be so much in debt that it becomes unlikely that you would ever pay it all back.

Credit cards also charge fees if payments are late.  Charges can quickly add up and feel overwhelming.  Also, you can end up paying more and more each month just to pay for the interest and fees.

Banking--Storing Your Money to Keep It Safe

Afghans may not be used to trusting banks and putting their money in them.  But Americans save much of their money in banks and credit unions.  There is not much of a practical difference between the two and both pay you a little bit for storing it with them.  A government corporation called the FDIC guarantees your money. It is safe. If the bank is robbed, if there is a tornado, or if the bank fails financially, your money is guaranteed to be returned to you, up to $250,000.  That means that the U.S. government will make sure that you get your money, even if the bank fails and no longer exists.  That holds true for every bank or credit union in which you have money.

Both banks and credit unions also make loans for cars repairs, and major purchases.  If you buy a car, you generally get a better interest rate from a credit union compared to a loan from a car dealership loan. 

Keeping Records of Your Money

It’s important that you keep good financial records of what you make, what you spend, what you deposit in the bank, and so on. Statements about your bank account are sent out monthly.  They allow you to compare what you think you have in the bank with what the bank or credit union has on record.  Nowadays people tend to look at their account records online rather than waiting for a paper statement.  By checking their records they can make sure that they have enough money to cover the checks that they have written and are going to write. 

Some people write checks to buy things or pay for services (such as a plumber), but more and more, people use credit cards and debit cards to pay for things.  Checks are a particularly good way of keeping a record of a purchase because they show that you actually wrote out the amount in your own handwriting.  A check also shows the date.  Your bank may return the cancelled check to you when they are through with it, or they may simply keep a stored image of it online.

People may also want to pay you using a check.  You will need to write your name on the back of the check in the space provided in order to deposit it.  This is called endorsing a check.

How to Get Cash When You Need It

To get cash, you can cash checks at a bank or grocery store.  Or you can use your debit card at an ATM—an automatic teller machine.  An ATM allows you to carry small amounts of cash, which is safer than carrying large amounts of cash around.  Most people have never been robbed face to face. However, it is not unknown for someone to pick someone else’s pocket.  And it is not unknown for a billfold to slip out of someone’s pants, or for a woman to leave her purse behind in a store. For that reason, do not carry large amounts of cash (over $100). 

Also, do not have large amounts of cash in your home.  If it is stolen or lost, you have no recourse.  When you lose or have a credit card stolen you will generally not be responsible for charges made on it by someone else as long as you call the credit card company and report the loss immediately.  They will cancel the card and you will receive a new card within 2 weeks. It is also wise to file a police report if the card is stolen. But if cash is stolen, there is not much that you can do about it.

An ATM allows you to get money day or night.  All you need to use the ATM machine is your PIN number (the personal identification number) that the bank gives you and the card. Some ATM machines charge a fee, but most banks have designated machines where there is no fee.  Go to your bank’s website to find the location of free ATMs.