A:

Setting up online banking can make a personal budget easier to manage through the use of multiple accounts or expense categories with the same financial institution (for expenses like utility bills, vacation accounts, retirement funding accounts, etc.). Some people find that by moving money out of a core checking or savings account they are less likely to spend money that is budgeted for a future expense. Also, some personal finance software programs (such as Quicken) can be linked directly to your online accounts to provide real-time analysis of all your balances and cash flows.

Once your bills and vendors are initially setup for online bill payment (and most large companies will now allow payment via this method), payments can be made electronically and instantly. You can have the payment go out on pre-determined dates (as in every month on the 15th) or simply log into your account each month and manually trigger the charges to your accounts. Either way, there is no postage to pay - and you can see the effect on your account balances immediately.

People may find that online banking makes sticking to a budget easier because you can easily sort payments to see how much was paid to specific budget categories like electricity, cell service and health care. This saves time and confusion from sorting through months of paper statements and allows you to compare spent amounts with budgeted amounts - so your budget resembles your real life as closely as possible.

For those who use budgeting with their investing, online banking can assist in transfers from banking to investment accounts. Again, a key feature here is moving money "out of sight" and directly into its budgeted purpose. Most brokerage firms will allow you to make automatic transfers to and from an investing account, so long as you have liquid assets like cash or money market funds. Many brokerage houses even offer basic banking services such as checking accounts, which you may want to consider if you are making regular cash transfers into investing accounts.

On the whole, online banking should be comparable or cheaper than standard banking. You'll want to be aware of any extra fees that exist for maintaining several accounts with the same institution, but most will offer free checking if you set up direct deposits for your paycheck.

Some people worry about the safety of online banking, but strong security measures are in place at nearly every major provider. And at most commercial banks, customers can always choose to walk into a brick-and-mortar branch to bank if they have a problem with online services or would like to talk with a bank employee in person.

To learn more about online banking, check out Keep Your Financial Data Safe Online, Choose To Beat The Bank and The Evolution Of Banking.

RELATED FAQS
  1. What US banks offer free checking accounts?

    Quit wasting money on monthly fees associated with your checking account and get a free checking account from reputable national ... Read Answer >>
  2. What is the best software for calculating the cash budget of an individual?

    Explore the options and features of several leading personal finance tools to find the best software for calculating your ... Read Answer >>
Related Articles
  1. Personal Finance

    Bank Account Tips For Young People

    If you’re just getting started with managing your own bank account, these tips will show you how to do it right.
  2. Personal Finance

    How to Create a Budget You Can Actually Stick With

    Following these five steps can help you create a budget that you can stick with.
  3. Personal Finance

    4 Easy Techniques for Budgeting Money

    Budgeting money is critical for everyone, but to be successful at creating and sticking to a plan, it’s helpful to have some tricks up your sleeve.
  4. Personal Finance

    Here's How to Create a Successful Budget

    Break your expenses into needs, wants, and savings goals for a budget plan you can stick to.
  5. Trading

    Top 5 Budgeting Questions Answered

    You don't need a degree to understand your money, begin saving and pay down debt.
  6. Personal Finance

    Why It’s Essential to Create a Budget for Yourself

    Budgeting may sound elementary, but it is the cornerstone of sound fiscal management.
RELATED TERMS
  1. Online Banking

    The performance of banking activities via the Internet. Online ...
  2. Checking Account

    A checking account is a deposit account at a financial institution ...
  3. Savings Account

    A deposit account held at a bank or other financial institution ...
  4. Automatic Bill Payment

    A money transfer scheduled on a predetermined date to pay a recurring ...
  5. Linked Savings Account

    Any type of bank savings account that is linked by account number ...
  6. Annual Budget

    Any budget that is prepared for a 12-month period. An annual ...
Hot Definitions
  1. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  2. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  3. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  4. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
  5. Socially Responsible Investment - SRI

    Socially responsible investing looks for investments that are considered socially conscious because of the nature of the ...
  6. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
Trading Center