The “new normal” of personal finance

The “new normal” of personal finance

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In generations past, children needed to understand how to balance a checkbook and smooth out a budget. But thanks to modern technology, checkbooks have been replaced by online banking, apps have replaced paper budgets – and the changes don’t stop there. At almost every turn, other new skills and gadgets have replaced old-school “hard skills” in personal finance, ushering in more modern, tech-based conventional wisdom.

Online banking: the new checkbook

Learning how to balance a paper checkbook was once a non-negotiable part of personal finance courses in schools. And while reconciling the books remains an essential skill for keeping your finances in the dark, the mechanism looks a little different.

For example, many modern bank users rely on their bank’s website to view recent transactions and past statements. With an increasingly digital world, you can see when transactions are posted in near real time, simplifying the process of tracking purchases and determining balances. No manual calculation is necessary.

But first, users need strong computer and internet skills and should be fully familiar with their bank’s online interface. For those with multiple accounts, aggregators offer an overview of all accounts, providing a complete picture of financial health but adding yet another learning curve. And yet, even with the benefits of automation, not all technical skills should be abandoned. Since check or wire transfer transactions are not posted immediately, account holders still need a general knowledge of cash inflows and outflows to avoid overdrafts.

Related: How digital wallets and mobile payments are changing and what it means for you

The convenience – and savings – of transferring money online

In the past, frequent trips to the bank were common to deposit checks, transfer funds and conduct other business. But modern online savings accounts have replaced these outlets and often offer better benefits and flexibility.

Using an internet-connected device, savers can manage their accounts from anywhere and move or deposit money with just a few clicks. Many online options are high-yield accounts, which means users can earn more interest on their savings.

However, while online savings accounts offer easy and user-friendly features, adding another website to your daily mix comes with a short learning curve. And although this money is cash, delays can vary when transferring money between accounts. Thus, bank customers should study the terms of their account to ensure that their money is available when they need it.

Related: You’re Losing Money at Your Bank – 9 Banking Alternatives That Pay Better

From Pencil to Tap: Budgeting in the Digital World

Balancing a checkbook not only ensures you keep track of your bills, it also makes budgeting easier. But the days of using pencil and paper to hand-draw a budget are over. Instead, modern budgeters often rely on digital budgeting apps that are faster and more efficient (once users learn their way around them).

Digital apps typically offer features like account linking, payment due date reminders, automated savings, and charts that visualize where money is flowing. But because these apps remove the need to sit down and “budget,” it’s all too easy to put your finances on autopilot. Users should definitely embrace these budgeting tools, but sometimes they should tweak their settings to ensure that their digitized budget still meets their needs.

Goodbye plastic cards – hello digital payment information

The days of rummaging through a wallet full of cards are behind us, replaced by the convenience of a cell phone. Specifically, mobile payment systems such as Apple Pay, Google Pay, and Samsung Pay have been incorporated into many modern devices.

Digital wallets are software “wallets” that store payment information, passwords, digital coupons, and government-issued IDs. They allow users to make purchases and pay bills quickly and securely. But as merchants increasingly adopt the technology needed to use them, learning to “touch and pay” will become a necessity, not just a practical convenience. And like the proliferation of debit cards, payment methods that make it easier to spend also make it easier to use the money. Again, it’s more important than ever to stay aware of your cash on hand.

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Stay up to date with automated bill payments

Automatic bill payments are periodic financial transfers on a predefined schedule to cover regular bills. Typically, they’re easier to set up and manage than writing multiple monthly checks. They also offer greater security than leaving a check in an unguarded mailbox and even minimize the risk of forgetting bills.

That said, they present unique challenges, like remembering to initiate bill payment for each new bill. Additionally, the payment cycle may be the same each month, but the bill amounts vary, especially for fluctuating expenses like utilities. Users who don’t keep their accounts “topped up” can find themselves at the end of their rope with a nasty overdraft notice.

Manual calculations may be a relic of an analog past, but users still need to be on top of their income, expenses, and savings. Instead of abandoning the technical skills of yesteryear, navigating modern personal finance involves adapting old knowledge to new devices. With technological and mathematical know-how, customers big and small can get the best of both worlds.

Related: Want to make more money? These are the 10 U.S. cities where average worker wages have increased the most since 2019.

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