Financial IQ Test: How Healthy Are Your Bank Accounts?
I was chatting with a friend the other day who couldn’t tell me exactly why she has three separate bank accounts, what the monthly and transactional fees were, or some of the basic terms and conditions. In a few short minutes, we found a way to save her over $300/year on unnecessary banking expenses, earn more interest, save paper (you gotta love those incidental environmental benefits), and to simplify her banking so much that it no longer seems daunting.
How do you measure up?
Following is a Financial IQ Test, designed to help you determine how healthy your bank accounts — and your interaction with them — are. Simply look at each statement, and answer them with a YES, NO, or NOT SURE. Keep track of your answers, and we'll see how you fare. Then you can reference some relevant articles on the topics you need some refreshers on.
FINANCIAL IQ TEST: How Healthy are Your Bank Accounts?
I know how much money (within $10) is in my bank accounts at any time.
I know the rate of interest my bank accounts earn.
I am aware of the overdraft terms and conditions for my account.
I have a separate high-interest account for short term savings.
I regularly transfer any excess funds in my chequing account to my high-interest short-term savings account.
I have two or fewer bank accounts (in my name only).
I have less than $3,000 in my chequing or (low-interest) savings account.
I know how much my monthly bank account service charges are, and what I get for it.
I know what I can do to avoid the monthly bank account charge (if possible – eg: maintain a minimum balance), and I do this each month.
I have an ATM nearby that is linked to my financial institution and doesn’t charge fees for withdrawals.
I don’t pay fees for debit purchases.
I can write a cheque if I need to.
I know how to balance my chequebook (to ensure I don’t go into overdraft if somebody takes a while to cash my cheque).
Paying my bills is easy (logistically), and fee-free.
I never go into overdraft.
I have direct deposits and deductions set up where possible.
I read my bank statement at least once a month to ensure there aren’t any suspicious transactions on it.
My PIN number is committed to memory and kept securely at home somewhere.
I shred my bank statements when I get rid of them (if I receive paper statements at all).
The bank has my current address and contact information.
I know what to do if my debit card is lost or stolen.
Did you keep track of how many times you answered YES, NO, and NOT SURE? Great! Give yourself the following points for each answer:
YES = 4 points
NO = 0 points
NOT SURE = 2 points
Aha! You like to play the ostrich game with your bank accounts: bury your head in the sand and hope everything works out! With a little bit of awareness of the banking tools at your fingertips, you can probably save money on unnecessary banking fees, earn more interest, and protect your accounts better from fraud or security threats.
You’re not doing badly, but you could stand to know more about your money and how it can work for (or against) you. Take some time to read the fine print, familiarize yourself with the rules of engagement of your banking institution, and ensure you aren’t paying more than you need to for the services you want.
Excellent! You have a good general awareness of your banking habits, you try not to pay anything in fees if you don’t have to, and you manage your short-term money effectively. Keep this solid foundation moving in the right direction by continuing to educate yourself, staying on top of your bank’s policies and procedures, streamlining your banking practices, and ensuring you are getting the best bang for your buck every day.