Is a Bank Account Worthwhile for Poor People

Of course you should have a bank account. Its free, and its the safe way to look after your money. But be careful. Only ever use that bank account as a safe place to store your money. Think of it as an advanced sort of putting money under the mattress. It can also give you financial goals to work towards – each bank statement will give summaries of how much has come in and gone out in the last month. Usually the challenge is to keep these figures the right way round…

There are many advantages to having a bank account. Its secure. Your bank looks after your cash, and there is no risk, like there is if it all lives in your wallet. Your cash is accessible – thousands of ATMs allow cash withdrawals. You can pay for goods on-line. Your wages can go straight into your account. Not only that, but your bank should pay you a few pounds every year as interest. If you ever have any amount of money start to build up in your account, start a savings account. Not only will that reduce the temptation to splash out and spend that money, but it will also give you more interest, which means more money in the bank every year.

At the same time, there are risks. Its not all plain sailing. Many banks give you overdraft facilities. Don’t use them. It will cost. Lots. Also, if your wise, be careful both with cheques and direct debits. Both can come back to bite you badly, with bank charges on top of the original bills. Debit cards can be a problem too, but in a different way. Normally these don’t allow you to spend more money than you have, but they do make spending money rather too easy. Its just the same action to spend 50p as 500 – swipe that card, enter a number, press ‘ok’. Its much better to leave you cards at home, and pay by cash – somehow spending money like that just makes it seem more real, and you spend less of it. Best of all is to carry no bank cards or money that way, however tempted you are, you simply can’t spend money you shouldn’t.

As will many tools, a bank account can be a double edged sword. Treat one with respect, and it will help you be careless, and it will come back to bite you.