Today’s article is from Brent Pittman, a financial coach and blogger living in Los Angeles. His goal is for your relationships and finances to improve as you Learn How to Do Money Better! Follow him on Twitter here
A woman walked into a bank and told the teller “Your ATM ate my budget!” The teller just laughed and asked how.
“You see-I never planned on all those $20 withdrawals, but you see I needed them.” “Can you do anything about my fees?”, she asked.
The teller became a little more serious and pulled up her account. It showed 13 ATM withdrawals for the month; 11 over the 2 withdrawals allowed. This amounted to $27 in overdraw fees (9 x $3). Plus she used out of network ATM’s on seven different occasions which amounted to another $21 in fees (7 x $3). The teller explained she had a total of $48 in fees that he couldn’t reverse.
The woman was now $48 over her budget in fees, not to mention the $260 she had withdrawn. The ATM had indeed eaten her budget.
Think this is just some story? In reality this is a common example of what happens to thousands of people every month. Bank fees and high ATM use are due to misunderstanding of rules, mis-planning, and procrastination.
The Bank has a Plan for your Cash
Since the ATM or Cash Machine came into existence in 1967, it has made withdrawing cash easy–sometimes too easy. With the more than 2.4 million estimated ATMs in the world, a cash withdrawal is just a few blocks away in any major city.
Very convenient. I wonder why so many store owners would spend up to $2500 on those small ATM machines? Perhaps because they know that 4% of people who see the ATM will use it.
If you use ATMs, then you’re not alone. 60% of Americans between the ages of 25 and 34 use ATMs eight times a month. The average amount withdrawn is $60.45. Using an ATM is very helpful, but you could easily overspend more in the business where you ‘needed’ that cash. In fact an ATM user will spend 25% more than non-ATM customers in the business where they got their cash.
Banks and ATM owners also know that we are creatures of habit and will return to the same ATM machine over and over again, so they want you to use their machine.
Protect your Budget with an ATM Plan
If you don’t have a plan for your cash and ATM usage, the banks have one in place. Their plan can leave you over budget and owing fees with money you don’t have. Here are a few suggestions:
- When you’re budgeting at the beginning of the month, determine how much cash you’ll need and withdraw only that amount. Be realistic and plan a certain amount to have fun with.
- Utilize the Envelope System to track your cash. Fill the envelopes at the beginning of the month for each category and only spend what’s in that envelope. Once the money is gone, stop spending. Simple. No more cash, no more spending.