Checking accounts are one of the most basic types of bank accounts, and they have a wide variety of uses. Here are some different ways you can use a checking account.
Teach a Young Child Basic Financial Skills
Since a checking account is one of the most basic bank accounts, it's the perfect account for beginning to teach a child some basic financial skills. Many banks offer child checking accounts with no or low fees, and these accounts can be used to show a child how to do the following:
- Budget for a specific upcoming expense
- Track income and expenses
- Develop a regular monthly budget
- Balance the account at the month's end
Most child checking accounts require an adult to also be on the account, but the joint ownership lets the child take on responsibility for the account.
Send a College-Aged Child Money
College students hopefully have the basic financial literacy that they need to manage a checking account, but it's still helpful to have a joint account with a college-aged child. At this age, a joint account allows a parent to instantly send money to their child on a regular or as-needed basis.
Additionally, the parent can check to see what the money that they send is spent on. The child in college gets more experience paying their bills and deciding what to spend funds on, but there's also a measure of accountability and safety since they don't have the account outright.
Manage Regular Monthly Expenses
Once you're on your own, a checking account is the perfect account to use to manage your regular monthly expenses. Checking accounts don't have limits on how many withdrawals can be made in a month like many savings accounts do. Using a checking account also will stop you from spending money you don't have and racking up debt, which can happen with a credit card.
Furthermore, putting all of your income into a single account and paying all the bills from that same account makes it easy to track your income and expenses. You can run a report at the month's end and see how much you earned that month and where you spent most of your money.
Keep Business Expenses Separate
If you run a small business, your business finances should be kept separate from your personal finances. This makes filing your taxes and managing your income easier.
The easiest way to keep business and personal finances separate is to open a second checking account when you start a business. One account can be used for personal finances, and the other can be used for business finances.
To learn more, contact a resource that offers a free checking account.