Bringing the person back to personal banking.

I often come across people who are mystified by their personal banking, it seems that a general understanding of personal banking involves two steps; money comes in, money comes out. Yes, this simple approach is banking at its core, but there are so many other factors that the in and out approach is like saying a simple internal combustion engine is the equivalent of an engine of a 787 Dreamliner.

There are a few things I’d like to start with, the first may be a hard albeit necessary truth:the age of free died along with the economy. Let’s face it, as a result of the last two decades of prosperity we have been conditioned to think that we deserve just about everything for free, including our banking services. While there are ways to make your banking relationships free you get what you pay for.

Banks are for-profit businesses, they leverage their deposit reserves to lend to borrowers. This is good, this way a person can afford their first home and a business can hire your neighbors. Banks offer a major credit channel that our economy has come to depend on. This credit channel allows our economy to grow and during normal times acts as the invisible hand for the market regulating it against its own demise.

So what’s in it for you directly? Banks offer valuable us services like keeping your money in a secured place, no not the big vault kind of secure but the FDIC type. Say that instead of a bank you kept your money at home, if a person breaks in and takes your money its gone, there are no hopes of getting it back. At a bank if you are a victim of fraud, you are cover for the most part. Lastly, keep in mind that your banking history will help you as you try to qualify for credit products.

Now that we have established the reality that there may be fees, in the next blogs we’ll talk about how you like a bank can leverage your assets (reserves) for profit. Keep in mind that this blog is solely based on my opinions and my knowledge of banking. I will admit that my expertise may be limited, so I invite your ideas, even if they contradict mine. My goal is to share what I know with you in the hopes that I will develop my ideas and learn from yours.

Stay tuned to this blog, have a discussion and grow, and together we can become financially savvy.