How to Maneuver the Financial World on a Low Income

The financial world of banks, financial advisers, and money services has an unfortunate (if expected) bias: it caters to people with money. If you don't make much money, here's how to watch out for yourself, and even get some extra help you might not know about otherwise.

Learn the Different Types of Bank Fees (and How to Avoid Them)

The quickest way to get hit by bank fees is to be unaware of them. Fewer industries have innovated so cleverly in the art of separating you from your money bit by bit as the banking industry, so it takes some savvy to be aware of how things could go wrong. That said, here are just a few of the ways that banks can charge you that you may not know about. And, in most cases, these are not mandatory everywhere:

• Monthly or annual maintenance fees: Many banks charge a recurring fee for account use. Some banks only charge this for checking accounts, others for any type. However, there are some banks (and especially credit unions) that don't charge any recurring fee at all. In some cases, you can have the fee waived if you keep a high enough balance. However, this fee is closely related to the…


• Minimum balance fees: Some banks may allow you to bank with them without a recurring fee as long as you have a minimum balance. If you go below that, though, you can get dinged.


• Overdraft fees: If you make a transaction that exceeds your available balance, some banks will pay the merchant, but charge you a fee on top of the money you owe (which, ironically, makes it that much harder to pay it back). As of 2010, banks are no longer allowed to charge these fees unless you opt in, but many banks will have you do so when you sign up.


• Returned mail/paper statement fees: In the internet age, paper is costly. As such, banks will attempt to minimize the amount of paper they have to use for your account. Some banks will offer "discounts" on your account if you elect to use online statements, and many others will charge you money if they send you a paper statement and it gets returned. In either case, it's beneficial to switch to paperless whenever possible.

This is by no means a comprehensive list of fees, but they are some of the big ones that you can not only watch out for, but avoid entirely if you're careful and pay attention. Here are some of the ways you can store and manage your money without blowing all your cash on needless fees.

Find a Better Bank

Despite the bad reputation most banks get, there are some out there that aren't out to gouge customers at every turn. We've previously looked at some of the better banks based on their fee structure and even the interest rates they return. Here's the list of the banks and their various perks:

• Ally Bank (ATM fee reimbursement and a 1.05% checking APY)


• ING Direct (1.2% on balances over $50,000)


• USAA (10 ATM reimbursements a month, free checking, no minimum balance)


• Capital One (no monthly fees or minimum balance)


• Alliant Credit Union (1.1% APY on checking, no monthly fees)


• PNC (no minimum balance or monthly fees, ATM reimbursements)


• The Incredible Bank (1.35% APY, free checking, ATM reimbursement)


• Charles Schwab (no fees, no minimum balance, ATM reimbursements)

These bank have been around for a while and are comparatively consumer friendly. You can also use this tool to search for banks based on criteria that you set, including location, fee structure, and even excluding specific companies if you don't care for them (and, let's be honest, we all have a list of banks we hate).

It's also worth mentioning if you've decided to spring for a smartphone (which, despite conventional wisdom, isn't always the worst idea for low income households), you may also consider the online-only bank Simple. In addition to having comparatively few fees, the software used to manage your account has many tools that make it easy to save and balance your budget.

Join a Credit Union

Credit unions differ from banks in two key ways: they are owned by their members, and they're not-for-profit organizations (which is distinct from non-profit, but not in a functional way that impacts customers too much). Because of this, credit unions generally don't benefit from harming its customers. Many credit unions have no or very small minimum balances (say, $10 vs $300), and considerably less harmful fee structures.

Unfortunately, this comes at a cost. Many credit unions require specific criteria to be permitted for membership. Some, like those for members of the military, will just remain off limits to most people unless you're already part of that lifestyle. Others might be available solely because you live in a particular area.

You can use tools like this one to find and research credit unions based on where they operate, how many members they have, and whether they cater specifically to low-income members. You can also use this tool to find where the various branches of different credit unions are near you, so you can figure out if a particular credit union works into your life.

Negotiate Your Way Out of Fees

So, maybe you can't leave your bank for whatever reason. You still don't have to stay beholden to a slew of fees. One of the most obvious and least-used ways to reduce your expenses is, as always, to just ask. No for-profit organization likes to give back money if it doesn't have to, but with the right script, you can often get your bank to waive a fee if it's not a habitual problem. Whenever you're faced with out-of-the-ordinary fees, your first step should be to call and see if you can get out of it. This goes double if you find yourself on the business end of a series of overdraft fees due to the way your transactions are ordered. Unfortunately, some banks will charge the largest expenditure first in order to charge multiple overdraft fees instead of just one. If you find yourself in this situation (as I have in the past), call immediately and, at the very least, try to get those multiple fees reduced to one—or none!

Consult Free Financial Planning

As with most areas in life, there is a wealth of educational resources for financial planning that's just sitting on the internet waiting to be discovered. The National Endowment for Financial Education is a non-profit organization (not affiliated with the US government, despite its name) that specializes in educating the public on financial services.

While the organization tends to specialize in helping educators, the information can be useful to consumers as well. Here, you can find a number of tools and information packets on subjects like transitional housing, debt, buying a car, and more. You can also find sites and tools like Spendster that helps highlight how much your impulse purchases are costing you. This calculator will show you how much a recurring impulse purchase costs you over time, as well as how much that money could've made if it were saved, as well as how much it would cost as credit card debt.

There are also communities you can join that offer helpful support structures and real-world advice. Subreddit /r/personalfinance is home to questions and advice from people from all walks of life. Some are very high earners with advice or advanced questions regarding retirement planning that you can benefit from, while others will offer advice on which financial goals need to be a priority first. If you have a question you can't answer by searching this forum, you can ask it yourself and get a few answers that can hopefully lead you in the right direction. As with any online forum, however, be sure to do a little follow-up research instead of blindly trusting whoever shows up to the thread first.

Ask Utility Providers About Alternative Payment Plans

As we all know, personal finance isn't purely a math problem. When we can pay things in monthly installments rather than a whole lump sum every year, we find that easier, even if the end result costs the same (or more). Utility providers know this, too. In some cases, you can call your utility providers, insurance agencies, or landlord and arrange smaller, more frequent payments. Even if these don't save you money, it can help to make the payments smaller and easier to manage.

Some usage-based utility companies also offer what's called "bill smoothing." These plans allow you to pay a more standardized fee per period all year long, rather than, say, having a low heating bill in the summer and higher one in the winter. This is usually done by estimating future usage based on past usage. While this is worth looking into, it should also be mentioned that bill smoothing can go amiss depending on the company. Talk to your utility provider and ask what plans they offer, but be sure to keep an eye on your bill. If you see a problem, call in immediately.

Find Financial Assistance (Both Private and Public)

If you have a low income, there's only so much that pinching pennies can do. Finding a better job would be ideal, but in the meantime, you need to eat. There are a number of government programs that are designed to help low-income households make ends meet. SNAP and WIC are government programs aimed at providing assistance for food, while Medicare, Medicaid, and the ACA are all designed to relieve or reduce healthcare costs.

If you don't qualify or simply prefer not to seek government benefits, you can also try to find help from private charities. This tool from the USDA can help find local, privately-run food banks. The American Red Cross and the Salvation Army can sometimes provide assistance with utility bills, food, or even housing.

Balance Your Virtual Checkbook with Spreadsheets

Physical, paper checkbooks may be going the way of the car phone, but we all still need to manage our money somehow. To that end, spreadsheets have never been easier to use and, fortunately, some people on the internet have already done a lot of the heavy lifting for you.

Here you can find a list of spreadsheet templates for Google Sheets for managing your budget (you can find more by changing up the search terms on that page). While most credit unions and bank services can track your individual purchases, budgeting spreadsheets give you a bird's eye view of your income, major expenses, and can even do some of the math for you.

While you won't necessarily need to become a spreadsheet ninja, putting your budgets together with a spreadsheet can help build useful, marketable skills. Once you've got a template set up and your basic expenditures input, it shouldn't be too much maintenance to keep the budget going.

Check Your Balances Every Day

This may not be a tool or app, but it's hard to understate how incredibly important it is to look at your balances every day. Speaking from lengthy and painful personal experience, when you don't have much money in your account, it's tempting to avoid looking at it. Seeing a low balance can feel intimidating and stress you out. Understandably, our reaction to things that stress us out is to avoid them. It's a natural reaction.

It's also counterproductive. As much as it might make us feel better to pretend that money doesn't exist, it does. Your memory isn't that great and relying solely on how much you think you have in your account is the quickest road to bounced checks, denied transactions, or overdraft fees. While you can try to find services that reduce egregious fees, there's still no good consequences for spending more than you have.

It's not the easiest thing to do, but make the effort to check your balance every day. It won't necessarily help you make more money, but it can help shape the way you approach your finances. Ultimately, changing your mind is more important than any individual trick or service you can use.

Photos by epsos.de, David, Renato Ganoza, David Wall, Ken Teegardin, and Jonas Ristaniemi .