I must confess to a new habit: I collect discarded ATM receipts. It all started when I walked by the bank in the building next to Motley Fool Intergalactic Headquarters, and found one such receipt blowing in the wind. I was shocked by how little the person had in her/his bank account, and how much she/he paid to get what cash was available.
To see what I mean, check out the stats on seven receipts I’ve recently picked up:
Withdrawal
ATM Fee
Account Balance
$60.00
$3.00
$72.79
$40.00
$0.00
$709.02
$100.00
$3.00
$8,973.53
$400.00
$0.00
$431.31
$20.00
$0.00
$301.73
$20.00
$0.00
$54.92
$20.00
$3.00
$48.04
What comes to your mind when you look at those numbers? Here’s what comes to my mind:
Some people have very small bank accounts. Only one of those accounts is substantial. Of course, this may not be the only bank accounts these people have. But if it is… well, these people are living on the financial edge. I suspect they have other accounts with much bigger balances: their credit card accounts.
Some people are willing to pay a lot to get their cash. Three of these people paid three bucks. In the case of the last person, that $3 ATM fee was 15% of the withdrawal and 4.5% of the entire bank balance.
Some people don’t give a hoot about polluting. I don’t dig through the garbage for these receipts; they all have been thrown on the ground. Some people take the time to rip them up and then throw them on the ground (even though there’s a trash slot under the ATM). I have considered the possibility that the receipts I collect aren’t indicative of banking customers in general but a self-selecting sample — specifically, people who have little regard for their community also have little regard for their own personal finances. Just a theory…
What’s Your Ther-Money-Stat?
Here’s another theory I have: We each have an internal level of financial stasis that involves having a certain amount of money in the bank, a certain level of debt, and a certain amount of each paycheck going to savings — an internal “ther-money-stat,” if you will. If we somehow find ourselves in a better situation than our regular level of financial comfortability, we turn up the spending. Perhaps it’s due to a raise, or a bonus, or an unexpectedly large tax refund. But as historian C. Northcote Parkinson wrote, “Expenses rise to meet income.”
On the flip side, there’s a level at which we freak out. Our financial condition drops below our internal ther-money-stat, and we swear off restaurants, movies, vacations, and anything but the necessities. (By the way, a difference in these internal levels is one of the biggest sources of conflict between couples.)
If I had just a few hundred dollars (or less) in the bank — as is the case for plenty of people, according to the ATM receipts I pick up — I would immediately cancel the cable and the cell phone, turn down the heat and layer up the sweaters, and likely get a second or third job. I would barely be able to sleep with that little in the bank.
Of course, I don’t know the stories behind these receipts, but my guess is that these folks have a much lower ther-money-stat than I do. The question is, can it be changed? Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there’s three to six months’ worth of living expenses in an emergency fund?
I think it’s possible; you GRS readers have told us before what got you to become fiscally fit. But I bet it’s not easy.
Season’s Depletings
I suspect that many of us (myself included) tend to get a bit self-righteous when we see evidence of people making bad financial decisions. However, I can’t help — especially at this time of year — to also feel sorry for these low-balance bank customers. There are plenty of people who are experiencing tough times due to no fault of their own. I can even conjure images of parents withdrawing from their measly accounts to buy gifts for their kids. (I’m a sucker for a holiday sob story.)
So whatever the reason for these folks’ modest bank accounts, here’s to hoping that they — and you — have an enjoyable holiday season, and that 2010 brings bigger bank balances to us all.
As a former financial advisor and English teacher, it was inevitable that Robert Brokamp would one day write about the management of money. His musings on retirement, investments, budgeting, and whoopee cushions can be found on Fool.com and in various other publications, including Get Rich Slowly and Newsweek.
He was a contributor to The Motley Fool's Money After 40 and Million Dollar Portfolio, the co-author of The Motley Fool Personal Finance Workbook, the author of The Motley Fool's Guide to Paying for School, and is the editor of the Motley Fool Rule Your Retirement newsletter service.
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There are 138 comments to "Where’s your financial comfort level?".
hsettle says23 December 2009 at 05:14
That’s a lot of unexamined assumptions! If you picked up my ATM receipt, you would see something similar, but the real story is this:
– Checking is always low, especially at the end of the month. I send everything that matters to savings, and make transfers when necessary. There’s no reason to keep $8000 sitting in a checking account in this day of electronic transfers and instant balance inquiries.
– The checking account has overdraft protection via savings. This doesn’t cost me anything.
– I pay the extortionate $3 ATM fee without blinking because it is refunded by my bank up to 10 withdrawals per month. I have a great bank. 🙂
It’s hard to say from just one checking account. My account that I share with my wife is usually hovering around the 50-100 range. When we get our paychecks, we pay the bills, put money in our savings account, spend our fun money and hold on to a bit of cash in the checking account for gas and miscellaneous expenses. The majority of money is in our savings account as I think it should be. I’d rather have a higher cushion than $100 but to have almost $9,000 in what I’m guessing is a non or very low interest bearing account is crazy.
Also, ATM fees are the devil. I kick myself when I don’t plan far enough ahead and have to pay them – which isn’t often.
One thing you may also want to consider is that some people (such as myself) keep a very low balance in their checking account. Many of us keep just enough to pay the bills; and transfer the rest to a higher yielding savings account such as eTrade or ING.
I’ve never understood why people leave their receipts behind, or chuck them on the ground. When you withdraw cash (at least in England) the machine will ask you whether you want a receipt, so why would someone say “Yes” if they don’t actually want it?
@John I don’t remember ATM machines in the US having that option but the simple answer is because people don’t care. I hate littering but I see it so often that I’ve gotten pretty jaded about the issue.
After seeing a person literally throw trash out their front door into the gutter in front of their house, I see that some people absolutely couldn’t care less about not living in an area surrounded by filth. And yes, trash trucks came to that area to pick up twice a week.
I agree with rzrshrp, it is tough to tell from one account. I get money out of my checking account as quickly as possible just so I won’t be tempted to spend it – every cent is budgeted so I know exactly what’s going where. That said, because I’m so obsessed with where every dollar is going, I normally wouldn’t withdraw cash ever. Everything’s carefully managed between automatic withdrawals, etc.
For me, my ther-money-stat freakout alarm sounded when I realized that we only have about 1.5 months worth of expenses in the saving account – ACK!!! We don’t have any credit card debt, but are still paying on cars, a house, and student loans – DOUBLE ACK!!!
Even though our family makes what most Americans would consider to be a VERY healthy salary, we’ve moved to a beans-and-rice and otherwise minimal spending lifestyle. I don’t want to wake up when I’m 45 or 65 (we’re in our late 20s) and then realize that I’ve only got $70 in the bank account.
don’t these receipts have account numbers on them? I would be concerned some unscrupulous person would take that info and have some fun.
That being said, it is rare that I withdraw money from an ATM. If I need, I’ll get cash back when I am grocery shopping or make some other type of purchase. If you saw the balance in my checking account you might think I was living on the financial edge, but like rzrshrp I don’t keep a lot of money in my checking account, maybe $100 a week for gas or incidentals and as a bit of a cushion. I prefer to keep money in a savings account unless I need to use, and then I will transfer to checking if necessary.
Oh gosh, the ATM! Cash gets me in so much trouble. If I have cash I spend it! When I use my card, I can track that, so it makes it more real. I just talked about this yesterday on my blog:
It’s kind of creepy but also fun that you’re collecting these. Almost like a sociological experiment.
As for the ther-money-stat question, mine is the pile of cash sitting in our ING account. Sure, it’s meant for a down payment, but with that pile sitting there I feel invincible.
If I got fired tomorrow it would suck, but I’d be fine.
I agree. Different people can have vastly different comfort levels regarding extra cash in checking. However, checking account balances can be misleading. Personally, I have about eight dollars in checking at the moment. I also have almost ten thousand in savings and over 100-thousand in retirement accounts.
I wonder about concluding anything from this. Every pay check gets direct deposited into my checking, but quickly gets transferred out, so my ATM receipt if I used the ATM would show a small account balance. Also, many banks rebate the ATM fees charged to their customers from other banks’ machines, so some of those $3 fees are really zero.
I think the ther-money-stat theory holds some truth and is exactly the reason my husband and I choose to keep our checking account balance low, shoving whatever money we can over to savings. From week to week I keep only what we need for the next few weeks’ budgeted expenses plus a small cushion in checking. The balance rarely drops below $200 but also never exceeds $1200-$1500 (which may not seem substantial to some people but it is well in line with our income and expenses.) The savings account is linked to a checking account so that money can be made instantly available in case of an actual emergency or planned large expense but keeping that money out of the “spending” account keeps it from being spent.
I agree with others, you cannot really say how much money these people really have in the bank…
At the start of the month I transfer all the budgeted money into their respective savings accounts and subaccounts, leaving not very much in the checking account (around 100euro or so)
whenever I need the money I transfer it between checking and savings (I have free transfers between my accounts, as well as free ATM), and I’d rather have all my money in various savings accounts giving me interest than having it stay idle in the checking account…
so if you’d find my ATM receipt (which you won’t :-> ) you would also think I’m a poor guy with lots of debt, but you’d be rather wrong :->
Less than $100 stands out to me. I don’t do much spending from my checking account, so I try not to keep too much in it, but I don’t like to have it below $500. You’d also see some ATM fees (not usually $3), but they are refunded to me at the end of every month.
We keep a $500 buffer in checking, in case of an error on our part or some other issue, but the revolving balance is usually over $1K, but this is usually because some check is uncleared. All the real money is in ING, a bank CD or our small retirement accounts.
I always go to the same ATM, which is where my bank is. Fees are for people who can’t plan out when they need cash.
I agree totally with the idea of a thermostat for money. One of the biggest things I have had to learn to do was to trick my thermostat into letting me save more. It’s not that I couldn’t save, or that I wanted to spend all that much, just that a really large emergency fund balance looked and felt so weird; I couldn’t sustain putting money aside. I had good retirement savings, but my emergency fund was stuck at $5k for a few years.
So I stopped trying to save a large lump sum and built a yearlong monthly CD ladder, each CD in the amount of my new mortgage payment. It was a psychologically significant amount, and it was small and manageable. Now I have an emergency fund that’s four times what it was before I had a house. It’s an easy six month’s living expenses (probably a year with unemployment).
Another trick is using my checking account only for the month’s expenses. I budget by the squeaking sounds it makes; it’s frequently below $50 at the end of the month. I’ve been doing that for years and it works really well for me.
I always look at the abandoned receipts too. 🙂
They seem to fall into 2 groups. People who tried to withdrawl $100 (or some other relatively small amount) and didn’t have enough in the account, or people who withdrew some amount and have a balance of $10,000 or more.
I assume the first group discards the receipts out of anger and the second out of indifference. I often wonder why someone would keep $10,000 in a checking account. Do you really need access to that much money on a regular basis?
I usually try to keep a minimum of about $1000 in our checking account, and $1000 in a linked money market account. Almost all our financial transactions are electronic and we put everything we can on our credit cards (and pay them off every month) so it’s not unusal to have a credit card bill upwards of $1000. With other bills being deducted automatically, there would be too great a risk of overdraft with less. And with interest rates so low right now, it’s not like there is anything better to do with the money.
One of the first things I did to dig myself out of debt (and a habit I continue to this day) was stopping paying ATM fees.
Not only did it save me 3-15% of all the cash I pulled out, it forced me to think about when I needed cash and better plan my spending. I couldn’t just leave the bar and walk across the street to an ATM, I had to plan beforehand how much cash to take, because the ATM there charges a fee.
I agree with the other comments on here. J.D. does make the comment that we don’t know what other accounts they have, but we keep our checking account balance higher than one month’s rent. I figure if there is enough money to cover our largest monthly expense, almost all other incidentals should be less expensive. For real emergencies, there’s savings which has more than the checking account and earns a lot more interest. As far as ATM fees, we almost completely ignore them now because our bank refunds all of our ATM fees (include a $6 ATM fee we incurred on vacation a few months ago!).
Funny, I used to this in college. But our current ATM receipt wouldn’t look much better since our day to day accounts are kept pretty low, $1000 or less, more often $500 or less. But we have cash in other accounts, savings, other checking accounts not tied to our ATM cards and in our ING accounts.
My ATM receipt might also show a charge to access cash (although probably not since most times I hit my own back) but my bank refunds three ATM charges a month.
Although the responses here would indicate that many purposefully keep their checking acct totals low as a strategy to maximize interest earned or as a psychological move (keeping money out of sight, out of mind), I have little trouble believing that the receipts you have sampled indicate exactly what it looks like- people who are chronically living on the edge of bankruptcy and playing money roulette.
Most people just don’t think about managing their finances or how much they pay to withdraw money at an ATM.
I think the solution is education. Anyone can achieve financial freedom if they learn how to manage their finances and increase their income. It doesn’t matter how smart they are. It doesn’t matter how much money they make. It doesn’t matter how much debt they have.
That’s one reason I love this blog and similar financial blogs. People can begin to learn about finances, and how to make money (like from having a blog!). That can lead to books, CDs and seminars. Through that kind of education, anyone can learn the skills to make as much money as they want.
@Minderbender – I agree. Many of the receipts I find show the person is trying to withdraw $100 and it is denied because the account only had $70. Living that close to the edge AND not even knowing how close you are, is not a good combination.
Scientifically, I agree you can’t tell anything from this experiment. However, I do find it fascinating. I find it interesting to observe behaviour of people I come in contact with throughout the day.
I would guess that, even if it is a self-selecting sample, the results wouldn’t be accurate (for lack of a better term) than most statistics that are thrown around currently.
Concerning my comfort level, I’m probably young enough to be used to being poor so the fact that there is less than $1000 in our checking account, while slightly worrysome, is not a freakout point yet. My wife and I are slowly working to keep maybe $1500-$2500 in checking while paying off student loans, building the EF, and paying off our CC. The CC are atleast low and really are just slightly larger expenses from the last couple of months that we paid upfront with the card and are paying off in installments now. Her card is at 0% interest now and accrues money to pay down her student loans which is a pretty nice perk for now. Hopefully as we get more settled and better at tracking/predicting our expenses, we’ll move our ther-money-stat up a bit.
Psh. I have a checking account just for my allowance and if you saw the balance thinking it was my everyday checking you’d be *stunned* (it’s currently about $10). It’s fun money, I’m allowed to spend it on frivolous stuff, and keeping it in a seperate account keeps me from over spending.
Plus, the bank refunds any ATM fees incurred on that account, so I don’t worry about them.
I like having my checking around 1k. It makes me feel better. Especially as I generally use my debit card for everything, so if I had an emergency happen to my car or some other emergency, I could probably just use my card. Anything bigger, and the situation would probably take a few days to work out and I’d have time to transfer funds.
On getting the receipt – I like getting mine, but not keeping it. If I get the reciept, it confirms my account balance. Otherwise I end up having to go through the ATM menu completely twice: once for the balance and once for the funds.
I don’t have any problems with the balance a person has but I do take a huge issue with ATM fees. I told my Mom that she paid quite a bit in ATM fees and she said she knew but was too lazy to go up to the bank. When the next bank statement came in, I added up the ATM fees and she was agog at the total. Needless to say, she now goes to the bank or does cash back at the register when grocery shopping. Personally, I hate the idea of paying to get my money. It’s enough I put in the bank for them to use it to make more money; but to charge me……..No Ma’am/Sir!
On a side note, I wonder how many of the reciept thrower aways (made up words) spent money on shredders protecting their information only to leave a major part of it on the floor for all to see?
That can be deceiving. If someone picked up my receipt they would think I had 20.00 to my name. I keep a very low balance in my checking account and transfer all other money to my higher yield online savings account…i also get my ATM fees refunded each month by my bank…so I’m really not paying anything to get my money…
The older I get and the more entrenched I get in life, the larger amount of money I need to feel comfortable…20,000 is my new comfort level…
i work as a nurse and emergencies happen…to everyone…i do not want my financial life ruined by one…
I’m a bit surprised at those low numbers, too. When I was younger (20-30) my ATM receipts would have looked like that (but never below $100). When I bought my first home (27) I would have kept enough to cover my bills and outstanding checks plus one months mortgage – so you’d see close to a thousand dollars in my checking account. Today I still abide by the same requirements – however my house and mortgage payment are bigger now so you’d see more in my account (but not quite the $8000 the one person had).
As for money market savings I used to be comfortable with a few thousand in that. But as I got older and had more financial responsibilities I had a bigger savings account. Now I am not comfortable unless I have enough to buy a car in my savings. That money should get me through most any major emergency. Someone mentioned $20k, that’s about right although in light of recent economic times I’m keeping more than that.
The comments are good, but I think most people are missing the point of the article. I think the ATM receipt approach is kind of a stretch for what is a good topic. I understand what Robert is saying.
After receiving my paycheck, and accounting for bill transfer, 401 contributions, and other savings contributions, I aim to have $500 – $700 cash for 2 weeks of expenses (which is usually more than enough). However, if for some reason after all my transfers, I end up with, say, $900-$1000 in checking, I tend to think of some “want” that I can now comfortably afford. Sometimes, I put that cash in savings.
Conversely, if after all my transfer and bills, I am left with only say $400 – $500 for 2 weeks, it makes me a little uncomfortable, and I start to think about pinching pennies a little bit so as not to have to go to savings for back up.
It’s the psychology of money and how we handle it.
I think it is indicative of today’s society. We tend to overlook common sense for convenience. My DW will withdraw funds from the nearest ATM rather than travel a bit to make the withdrawal from our bank. Lectures about the fees incurred fall on deaf ears. The value of time trumps the value of money.
I think you make too many assumptions. My checking account is always low just before payday. When we get paid we pay the bills due before the next payday and everything else goes immediately into investments or savings with the exception of a ~$200 cushion.
As for the fees, you don’t really know what’s going on. Perhaps this person is primarily “cashless”, needed cash for a certain transaction, and there were no branches of his bank nearby.
This post spoke to me because I was one of those people. I figured if I have $10 left in the account, no worries. And yep, the $3 wouldn’t have slowed me down at all. I am thankful that I reset my thermostat!
There is something that is being over looked. If you’re reading the blog post on “Get Rich Slowly” you are probably concerned about saving, investing, and building wealth. If you have been following any of the advice on this site, or used common sense for that matter, you probably have a reasonably comfortable amount of money in your savings accounts that can be transferred to your checking account relatively quickly.
But, I think the article is relatively accurate in capturing the spending and savings habits of the average American. Remember only in the last year has the savings rate of the average person in America crept above 1%.
So yes, have pity for most of these people. As a CFP and professional in this realm try to help educate them (even if it is the manner of free workshops). If they are in the same boat I was in, or J.D., or many of the readers here found themselves in not so many years ago, they are lost and looking for answers, and hope that they are able to find security and peace of mind in their finances.
Count me among those who would have a low balance on the account from which I withdraw the cash – it’s just my slush fund, the only account where I take any sort of money from in the first place. My “real” money lives elsewhere. Furthermore, I don’t mind the ATM fees because I use a credit union that refunds them at the end of the month (Navy FCU.) So I think it is not clear, what someone’s situation is from leftover receipts.
I do absolutely agree with you on the littering thing, though. Jerks!! I also would not be surprised to see a correlation between those who litter, and those who have little regard for tidy finances.
You would find the exact same thing if you were to find an ATM receipt of mine…though I don’t often withdraw cash, so good luck finding one!
My financial comfort level is essentially zero dollars. I’ve been broke and homeless, so a low balance in my bank account doesn’t affect me like it would some. Not to mention, my expenses are almost nothing and being a student, I don’t expect to have a large bankroll.
To me, there are worse things than a small bank account. Whenever I do get money, I use it to pay off my Student Loan balance so I’m not choking on debt later in life. I’d rather apply the money towards a debt than leave it in my bank account. I save for expected expenses such as car insurance but for the most part it is money in, money out.
Its an easy budget to have…zero balance. Your money is already spoken for and has a purpose. If you don’t have it, you can’t spend it.
I don’t think any conclusions can really be drawn for these receipts. My pay check is direct deposited and immediately either A) spent to pay off the last 2 weeks of purchases on my credit care, or B) transferred into various savings accounts. My balance, 24 hours after getting paid, is just over $100 and stays there til I get paid again.
I remember when I was 19 and I would have $40 left on my overdraft protection ($250) and my little bookstore paycheck would get me barely into positive territory.
I’m sure some people really do have $20 left. People say things like that to me sometimes, that they’ve got X amount till payday. Some people are always cutting it close.
I always have about $2k in my checking account. Anything below that and I put the brakes on spending anything. Reading the other comments, that seems higher than most, but it’s a joint account and the $10 in interest each year that I’m not making is well worth it in piece of mind.
Conversely, when the balance creeps up, I always transfer it to a high-yield account. I guess that’s my ther-money-stat.
You mentioned not knowing the backstory to the owners of these accounts — here is one:
I’m actually embarrassed to say that at 46 this is the first year that I have taken the effort to read personal finance blogs/books and have taken extreme steps to turn my finances around.
The fact is that I left my parent’s blue-collar, lower-middle class home just before turning 18 and half-way through my senior year in high school. I lived a comfortable life but never learned money or practical skills. I used to joke that I never wanted to draw up a budget because I would have to face the fact that I didn’t make enough money to live, which is the truth. I’m amazed that I was actually able to graduate that year and follow it with a year attending secretarial school.
Long story short, the years of working as a secretary to cover my basic existence continued until I woke up one day and was 40-years-old. It is sad that I was sleepwalking through life always reacting instead of acting. Working paycheck to paycheck becomes a way of life until a lightbulb goes off and you realize that you are an adult and don’t have to be a victim of circumstance. I often think if this is my story, how hard it must be for those born into low-income households where I’m sure money management is a larger issue.
As with everything, education is key, but not all people know where to find the information they need. They may never know that this information exists and like the younger me laugh at the idea of a budget because it would only highlight the sad fact that they already know — they can barely survive on what they make.
You would probably be suprised by my ATM receipts. I refuse to pay to get my money out however my balance is very low. That is because my checking account pays next to no interest. So I keep most of my money in the savings account and move it to the checking account as necessary. I only need 3 days to move from my high interest account and no time at all to move from my lower interest account (the true “emergency fund”). I am also an accountant by trade so at any given time I know exactly how much money is in the accounts and what of that money is already spoken for.
Haven’t read the previous posters, so please forgive me if what I say has already been said:) But, would like to point out that, my ATM receipt would be something similar. For-
1) I use debit card for day to day purchases, so I like to have only minimal amount in my ‘checking account’. So as to limit spending
2) After payday, I have automatic transfers to my savings and money market accounts at ING and to the money market account of a local credit union
3) My checking a/c is a bank account which I posesses since Grad school days and only because its conveinient, i am still with that bank. My money never accumulates in the checking account coz it gets channeled to right sources and paying off bills.
ATM receipts are not indicative of how wealthy and how financially responsible an individual is;-)
I also would like to say that i never do ATM transactions. I always do cash backs from a Pharmacy/Supermarket, since there is no charge on it:)
I have a pretty low balance by the end of the month, but I do NOT litter. Or pay fees, unless I’m traveling–I have a fee-free ATM within walking distance of my house.
As long as my checks will clear, I don’t worry about the balance in my checking account. My ther-money-stat setting is more about the combined balances in my checking, savings, and money market accounts. I can move money around between them instantly if I need to.
Once the emergency fund drops below $1000 I get a little concerned. It’s good to be prepared for problems and knowing I have something extra lets me rest a little easy.
“Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there’s three to six months’ worth of living expenses in an emergency fund?”
Probability = zero.
When you have no conception of the value of money; whey you pay ‘whatever is asked’ for something, you just don’t get it.
Sadly, these people are poor, will always remain poor, and don’t know how to make things better for themselves.
The “ther-money-stat” concept is right-on and probably related to an inner debt pain tolerance.
HOWEVER, I agree with much of what my fellow readers have said up to this point. You’re making a lot of assumptions here about people’s balances on their receipts (though you do rightly point out that this is a self-selected group).
On top of everything else, we should be looking at the average balance, too, not just what happened at one point in time. This data should be available somewhere and would make a much better lead-in for the concepts you discuss.
Glad to know I’m not the only guy that looks inquisitively at the discarded ATM receipts.
We don’t keep much more than $1k in our local bank account, preferring to keep most at ING where we earn some interest. You’re right though, having under $100 would make me take action.
I think your right about the theory of people having a comfort level that the try to maintain. I’m used to having very little in my checking accout — sometimes even less than a dollar, although $20 is more common — because I immediately distribute my cash to savings, bills, and investments. I almost never spend cash. Right now I have about $800 in there and it’s bothering me that I haven’t had time to distribute it.
@Mark W. (#47) Bzzzzzzttt. Wrong answer. I have to disagree with you completely on this.
First of all, just because somebody has a low balance in their bank account doesn’t mean they’re poor. It means they have a low balance in their bank account. It may also mean (and I think it frequently does) that they’re living paycheck-to-paycheck, but that doesn’t mean they’re poor. As I’ve frequently said, I used to live paycheck-to-paycheck on $42,000 a year. In fact, I was exactly one of these folks that Robert is describing in this article. (Except I would never pay an ATM fee. I think I paid one once, and that’s because it was an emergency.)
But where I really take issue with your comment is this: When you have no conception of the value of money; whey you pay ‘whatever is asked’ for something, you just don’t get it. Sadly, these people are poor, will always remain poor, and don’t know how to make things better for themselves.
These people do not have to always remain poor. (Or, more accurately, remain financially illiterate.) Not at all. As I said, I was one of these folks. Five years ago, this article could have been about me. Today I’m a completely different man.
People can and do make changes. In fact, I’d be willing to wager that many GRS readers have had this sort of transformation, or are in the middle of doing so. I think the “these folks can’t change” mindset causes a lot of harm. Seriously. I think this attitude is dangerous and damaging. The challenge is to find a way to reach these people, to show them how to make things better for themselves. But if you believe they can’t or won’t ever change, there’s no incentive to try to help them.
Me? I believe that people can change. Most of them want to change. But most folks feel trapped. They’re limited by their own ignorance. They don’t know what they don’t know. That’s how I was, anyhow. And I got out of that by listening to what others had to say. Now it’s my mission to share what I learned…
I agree that the receipts cannot give anything conclusive. The only exception is the ones who try to take out $100 and get denied. That is a big indicator of someone who spends until they run out.
If you don’t know that your bank balance is so low that you cannot take out $100 that means, at least to me, that you don’t track spending at all! You keep going to the ATM until it says “no” and then wait for the next paycheck and eat Ramen until then. (ok maybe a bit extreme but you get the point!)
I also agree that education is the way. I took a personal financial planning course in college as an elective and I was shocked at how little people kept track or even knew about managing money. Most of those people left “enlightened” and at least had a fighting chance of living below their means. It was one of my favorite courses in college and put me on the path to learning a lot more about finance. I have a Finance degree too.
The bottom line here is that in personal finance, and in life in general, we all tend to learn in the same manner: “The Hard Way”. It takes a major event for us to react and make real changes. If we can get to people before that happens then we win!
The problem is the lack of knowledge on these people’s parts. Moreover, it’s a struggle from day to day. They don’t think ahead and thus never have money in the money, they can’t see past today’s needs, and thus will always be stuck in the trap. It’s truly sad.
In this college town, there are ATM machines near a lot of the downtown bars, and I suspect that a lot of the discarded receipts would show the effect of students who are taking out money to drink with… without thinking about it. Students who are living from small paycheck to small paycheck — well, who may not actually be responsible for their largest expenses, and so aren’t so concerned about how much they have in their accounts…
And… it also bears pointing out that the truly poor usually do not have any banking. They’re termed the “unbanked” and there’s a nice sized literature on whether or not it’s rational to use expensive check cashing services rather than a real checking account when you’re at poverty-level. (There’s also a literature on how to get banking to the unbanked, as we middle class and up people all *know* how rational it is.) It is a difficult cycle to escape, especially if you’re poor and have even the slightest (even below-average) self-control problems.
One of the chapters in a fantastic and thought-provoking scholarly book called Insufficient Funds does a really good job summarizing the literature and argues that this perpetual cycle of borrowing at exorbitant rates from check cashing centers may actually be less costly that having to deal with check overdraft fees and fees for just having an account. We usually think of checking or saving as being no-fee, but when you’ve had trouble with checking or savings or can’t afford to stay at some minimum, free checking is impossible to get.
Thank you for addressing that so quickly, JD. Add me to the list of GRS readers who would have paid $3 to withdraw $20 less than a decade ago. Ignorance is not the same as inability. Ignorance is remedied with knowledge, and I think many of these “poor” people simply don’t know there is another way to live. I know I didn’t. Then I got a job working for a bank, which showed me bankrate, which led to my discovery of PF blogs, and bam! six years later you wouldn’t catch me dead paying an ATM fee (or interest on a CC for that matter.)
Is it just me or do some of these posts feel a little defensive? It almost seems like he’s looking at some of YOUR receipts and you feel the need to explain yourselves. As a previous poster pointed out, I think a couple of these people might have a stash of money somewhere. But I have known too many people who live like that to think it isn’t completely plausible that some of those people have exactly that much money to their name. A friend of mine once had to walk into the bank to withdraw $10 because she had <$20 in her account so she couldn’t go to the ATM!
The ther-money-stat is true of everything. We all have a comfort level of cleanliness, activity, and spending that can be difficult to overcome. Over the last few months we have been dealing with my sister in law, who is a casual user of drugs, but her main problem is that she’s a loser. One psychologist we spoke to warned us that bailing her and her husband out in small ways as they spiral downward is a VERY BAD IDEA because they redefine normal downward, and their normal is well below what we would expect. In his words “three boxes of Cherrios and they’re set.”
I know plenty of people who have changed their way of thinking, usually after a major life change: getting married, buying a house, having kids. As far as forcing someone else to change, it won’t happen. But it wouldn’t surprise me if some people are behaving outside their ther-money-stat and don’t even realize it. They are uncomfortable and don’t really know why. As always in that case small changes are the best way to go. They are easiest, and less scary than a complete life change.
Mark Foo | 77 Success Traits says23 December 2009 at 09:31
You actually need to pay a fee to withdraw your own money from an ATM? Now that’s something new to me. We don’t pay such fee in Singapore. And I think to charge such a fee is pretty ridiculous.
What I’m thinking. Two things.
1. They could be very smart. Around here, a regular bank account pays practically nothing in interest (mine is at around 0,1% I think). Having anything more than day to day expenses in there is useless, so they could be one of those who have a savings account somewhere.
2. As you said, we all have different comfort levels. I wouldn’t be comfortable but for some people, having an extra 70 bucks CAN be a security blanket. When I was still in school I lived “on the edge” every single month. A lot of students do. If I had 70 bucks extra I felt rich.
Oh, and those ATM fees, I have paid those on occasion ie whenever I’m abroad and withdraw cash.
While I find the concept of collecting people’s ATM receipts rather peculiar, I find the “financial thermostat” concept very interesting.
I feel that much of this is subjective based on the individual’s income and level of comfort, nevertheless, if proven true, it seems that alot of these individuals may not be exactly “frugal.”
Given the statistics on the amount of Americans that use savings accounts, I believe it is HIGHLY unlikely that these individuals have money stashed elsewhere, as a checking account (where the majority of cheques/ automatic money transfers are deposited) are usually the main place people maintain their cashflow.
While I feel that comment#47 was a bit extreme, I do feel that there is some substance to what he said in the psychological sense: YES there are people out there (like our beloved J.D.) who do revolutionize their spending and savings habits, but is this very common? NO, I do NOT think so.
We GRS readers are from a select group of individuals who DO want to change and improve our habits, but as J.D. mentioned before, despite the recent economic downturn etc. the majority of people simply do not.
Their “Financial Thermostat” was likely set years ago, as habits before 25 years of age are quite difficult to alter for the majority of people. (As a psychology major, I’ve seen these statistics time and time again.) Not to seem pessimistic, as anything is possible, but the evidence usually doesn’t lie.
Interesting article. 😉
PS. Ever notice Robert’s guestpost articles on GRS seem to frequently fall flat and into much controversy? While I think he’s a talented writer, he is also quite opinionated which I feel tends to “rock the boat” on here frequently.
I totally agree with J.D (#52). I used to be the one paying the fee to basically steal from myself. That was when I didn’t have any money and so it felt like “What’s another $3 on top of the nothing I already have?” (I never littered though!)
Now that I have begun to educate myself and frequent GRS, my ther-money-stat is a bit different. I now know exactly how much my expenses are and how much I should have left over. If I’ve paid all my bills, I should have about $1000 left in checking. If I get below $600 I start to worry because it means I have overspent. If I have over $1000, I move the extra to my Emergency Fund which I am trying to build up to a 6-month amount.
The main difference for me has been education. If I technically did not know how much my expenses were, then I could live in denial and pretend everything was fine when I had $2 in my account. Now that I know what I need to do to survive and get ahead, I won’t allow myself to get back to that low point.
Saving money is a skill, and like any skill it can be learned. This skill is not always a function of class as many presuppose. I readily recall a friend, who was a realtor, told me that two attorneys came in to purchase a house and had a total of $5K to put down, while a guy who owned a laundromat had a bank account with a balance of over $500K. Some people just have the accoutrements of wealth, a lavish home, huge cars, clothes, purses, exotic vacations. In stark contrast, others chase the substance of wealth, fiscal security. Parents cannot teach their children what they do not know. A vast amount of American citizens come from families of origin that struggle, and struggle has defined their entire life. Their children do not grow up expecting more. You do better when you yearn for more. Normalcy may be a function of your peer group. The Internet is the great equalizer – you can expose yourself to so much more. The GRS blog and the MSN Money Message boards challenge me to realize that my fate is in my own hands, that I do not have to live from paycheck to paycheck that lifestyle inflation is a choice, and that I do not have to be saddled with debt indefinitely.
@Shara: The “defensiveness” you are noticing is probably generated by the tone and assumptions of the original article. Those of us whose ATM receipts or bank statements look like this, even though we’re in control of our finances, feel judged.
Count me in as someone who keeps an eagle eye on her money, but whose checking account gets pretty darn close to zero every two weeks because I am saving every penny possible in ING!
#61 “PS. Ever notice Robert’s guest post articles on GRS seem to frequently fall flat and into much controversy? While I think he’s a talented writer, he is also quite opinionated which I feel tends to “rock the boat” on here frequently.”
I think the term isn’t “fall flat” but perhaps “generate interest” or “provoke thought” Controversy isn’t necessarily a bad thing when it promotes thoughtful discussion.
I also don’t think the atm slips necessarily tell a whole lot… a lot of online accounts will reimburse atm fees 100% and if you’re banking online it’s relatively easy to keep the checking balance low and the savings balance high. But hey, the guy is from Florida (according to one of those linked posts), and the general thermoneystat idea is still an interesting one.
I’m betting most of the low account balances are college age students.
I know when I was a college student, ever now and then, my checking account balance would get very low… I had a brokerage and savings account in addition to my checking account though too. Another reasons I think the accounts might be college-age students is because they are willing to incur a $3.00 withdrawal fee (because the bank isn’t there at home bank…). After all if it were a normal persons account, $3 out of $20 is a 15% loss on getting that money out (hopefully all of us way out of college folks know that)!
Wow, $3.00 that hurt just typing that… What a rip off…
Several someones asked, “Who keeps big balances in their checking accounts?” I do, because it is easier, and I never worry about having enough money to do what I want. I have 2 checking accounts, each with a balance of ~$25k. Only one has a debit card, which I use for everyday expenses and bills, and the other is reserved for annual or semi annual expenses like taxes and insurance.
I’m thinking about making changes to my setup, after reading this site for the last several months, but for the last couple of years, I haven’t had any problems with high checking account balances.
Another thought, those who read GRS or other PF blogs are a self-selecting group as well. We tend to want to change our ways and socialize with people who want the same thing just like many of the people who throw ATM receipts on the ground. Both groups of people demonstrate a skew in one direction or another from the actual average and median.
Still, as I said before, while this sort of “experiemnt” can’t/won’t prove anything, it is an interesting and thought provoking exercise.
Paul Williams @ Provident Planning says23 December 2009 at 10:13
J.D. your comment at #52 is great. You’re a wonderful example of someone who’s made significant changes and come a long way.
I think you’re right about most people as well. They want to change, but they’re not sure where to start. They also need some accountability – someone to spur them on and ask how they’re doing. That’s why the GRS community is so great. People are willing to help each other and discuss ideas on how to improve.
As for these people with the low checking balances – I’d say it’s hard to tell what’s really going on there. I just know I wouldn’t be comfortable with such a low balance.
A friend of mine showed me his ATM receipt once and he had $12,000 in his checking account. I was shocked at the amount (I was 21 at the time and that was a lot of money to me). But he said it would be all gone that week paying off debts from his divorce. He is crap with his money tho so I think he was shocked to see that much in his account as well.
Fascinating about these receipts tho! Whole stories behind them.
I just checked my Chase balance – it’s $4,430.13, and I’ve already passed the “wow, that’s lower than I’m comfortable with” level. It’s been an expensive month *and* it’s right before payday, which is always when bank balances are lowest.
But if you were to look at an ATM receipt, it would show a $405.73 balance, because I have four different accounts set up at Chase, between which I can instantly transfer money. The total balance of all four is over $4400, but only $400 of that is currently in my main checking account.
I also have other accounts with much bigger balances – my 401k and my Schwab account, but I can’t transfer funds from those to my checking account instantly if I need to. I don’t have any credit cards.
But if you found my ATM receipt, it would say $405.73 on it, and you’d assume I had a bunch of credit card debt. If you’d found an ATM receipt a couple weeks ago, it could have said I had $15,180.96. That was right before I paid off my car. My net worth and financial security have changed very little in the intervening two weeks, but my main checking account balance looks drastically different.
It is interesting also to note that they are taking money out of their account instead of “floating” it an paying in one payment at the end of the month.
Cash is a poor vehicle for storing and/or growing wealth.
I’ve been thinking about the “ther-money-stat” and I realized that mine is VERY cautiously set. I see lots of commenters posting that they keep a very low amount in their checking accounts, and that they are always aware of the big picture so it’s no problem. Intellectually I know they’re right, but the thought of doing that myself makes me a feel a little tiny burst of panic inside. I keep $700 OVER my no-fee minimum. Even though in 4 years of careful financial tracking I have only once ever gone over by mistake, and then only barely! But there’s just something in me that doesn’t trust myself, and so I keep more than I really need to in my checking to avoid the possibility of incurring fees. It probably doesn’t make financial sense, but it does make me feel at ease.
I agree that the idea of financial thermostats causing difficulties in marriages is one worth writing about more.
When a person is happy with 1K in the bank, but the other wants/needs 10K in the bank in order to feel comfortable, it IS an issue. It is not easy to deal with.
My company instituted 8% paycuts, took away our 401k match and cut about 25% of the workforce over the last year. I went from aggressively paying down my mortgage to aggressively beefing up my emergency fund. $20K is about my comfort level for my savings, $1K (about my mortgage) is my “ther-money-stat” level for my checking account.
There have been a few surprises over the year that caused a dip in savings and I’m trying to figure out how to be less panicked when that happens. It’s what it’s there for, right? To not have to take on more debt? I also find myself running the numbers over and over. We are getting the paycuts rescinded and our matches back next year, and plans that were shelved for security have to be looked at again.
As a single person with a mortgage, is 6 months of savings really enough? Should that be gross or net? How do I balance purchasing a new (to me) car? Do I take on a car payment or risk getting stranded in the middle of nowhere in hopes of paying cash in a year or two? Do I halve my emergency fund to pay for it now?
How do you confidently calculate your risks? As a person that has made really, really expensive mistakes with every large purchase I’ve made (flaky car replaced with flaky car, old house with way more repairs needed than I anticipated etc). How do you know that you are making the right decision or that you won’t regret “good enough”?
I agree that, while many of us here strategically keep low balances, the receipts in this experiment are probably from folks at the other end of the spectrum. I think that’s because of the littering and the ATM fees.
When I was out of college I was living on the financial edge. I had student loan debt, didn’t know how to negotiate salary so was making next to nothing at a full-time admin job, and did not have a budget. I would get down to $8 in my checking account and often was overdrawn. I just thank my lucky stars that, at that time, credit card companies weren’t targeting college students so aggressively; I only had one department store credit card. It took me years to climb out of the student loan debt and turn my financial habits around.
Now I have two checking accounts; one for necessities, the other for discretionary spending. I get uncomfortable if either falls below $100, though that is rare. I have $20K in an emergency fund, over $100K in retirement, my car was paid off this year, and I have $130 in CC debt which will be paid off at the end of the month. A lot of my good habits have started since reading this blog.
By the way, even in those dark days I never threw my ATM receipts on the ground… 🙂
I’m gonna go out on a limb here and say that what you have with those low balance people is most likely what it really is because of the low withdrawal amounts.
I’ll use myself as an example. I tend to have very little in my checking account but I also take out a lot because I use the envelope method for budgeting. I also always turn down the receipt if given the option OR throw it away so you’d never find mine LOL
I am still very much in money rehab mode, paying down debt, and many times am still on the paycheck to paycheck cycle. But, I have two savings accounts with a combined total of about $1200 and a 401K with over $12K in it even though I’ve only gotten serious about money for about a year.
Unfortunately, most of my friends’ ATM receipts look just like some of those (if not much worse) and I can tell you they’re in pretty much the exact financial situation you’ve painted. They tend to make withdrawals under $100, pay fees out of desperation, and carry small balances if not overdrawn ones.
By the way, I also would like to point out that we ARE in an economic recession and while many GRS readers are very responsible and carry small checking balances but have heaps of money elsewhere you have to remember you are a very small (but hopefully growing) minority. Most Americans are in trouble financially especially right now so just statistically speaking, I’d guess the chances of those receipts belonging to a GRS-type are slim to none.
I’m amazed that people don’t take their ATM receipts or at least don’t choose the “no receipt” option. Perhaps that’s not available on all ATMs? Pay a fee? No way!
Right out of college, I lived paycheck-to-paycheck for about six months, until one month when my company screwed up and didn’t get me an expense reimbursement check on time. I didn’t have enough money to pay both the rent and the Amex bill (charge-card, had to be paid in full). It arguably wasn’t my fault, but it was my problem, and I found it terrifying. I paid the Amex bill, took a cash advance on my personal credit card to pay the rent, paid off the cash advance the second I got the expense check, and decided that I was never going to let that happen again.
And five years later, I haven’t. These days I keep enough money to pay an average month’s work expenses (which is around a month and a half of my personal expenses) in a savings account at the same bank as my checking account, so I can transfer the money over immediately if I don’t get my expense check on time. I also have accounts at ING — a long-term emergency fund and a car fund.
Here’s the interesting thing: My ATM receipts while I was living paycheck-to-paycheck would have been pretty much the same as my current ATM receipts. My overall comfort level was completely reset by that experience — but the changes I made all involved my savings. If anything, I let my checking account get lower now, since I’ve got a slush fund to back it up with.
If I only had a few hundred left to my name, I’d be really panicking. I do know someone like that, and his situation is so bad, it gives *me* panic attacks. He’s about $4000 in debt, has NO savings, and will run his checking account down to $15 or $20 each pay period just to pay the most basic of bills. He lives on minimum wage and has no benefits at his job (and due to circumstances that happened 25 years ago, no hope of ever getting better employment).
Although I don’t have as good as most folks here, I’m thankful that I don’t have it as bad as that person I just wrote about. My checking + savings combined never drops below a couple thousand (if it ever did drop, I’d panic). I try to keep a $100 cushion in checking at all time in case of bank errors. And I’m paranoid about keeping records…I’d NEVER let an ATM receipt blow away. They get taken home and filed.
I hate, *hate*, *HATE* ATM fees, and I’ll do anything to get around them whenever possible. Usually I just pay for things using my debit card, but if I actually need cash for something, I’ll try to find a credit union ATM (here in WA, the credit unions have an agreement to let their members use each other’s ATMs without fees). Or I’ll go to the nearest Wal-Mart/Target/Safeway/etc. that allows me to buy something trivial (yet useful) and get cash back with my debit card.
If I am forced to use an ATM that charges a fee I will withdraw at least $100 to make it “worth my while” and keep the fee to a small percentage of the transaction. I suppose that really doesn’t make much sense–after all, if I withdraw more money than I need at the moment then I’m more likely to spend it. The idea of paying $3 to withdraw only $20 instead of $100 just seems excessive, even if $20 is all I really need at the time.
And any receipt I have from an ATM or a debit card purchase goes home with me, and once that transaction has cleared my bank it gets shredded (unless I need it for warranty purposes or a potential return/exchange).
I don’t think you can tell that much from ATM receipts, although it’s kind of fun to spin a story around I guess. Personally I’m another of the “almost nothing left in chequing because it’s all been transferred to savings/investments/bills” people.
I once found an ATM card and receipt sticking out of the machine when I went to get some cash, here in Toronto late one saturday night. I looked and the balance was more than $32,000.
@Dar. Either way you’re out three dollars but I understand the feeling. Paying 3$ (plus the fee my own bank adds on top of it) to get my own money makes me feel like an Idiot.
I transfer all money from checking to ING into various subaccounts for different budget areas. I use a CC for all purchases throughout the month and pay it off in full at the end of the month. EF is currently sitting just under 1 month of expenses (in ING) and the ‘fun fund/vacation fund’ is around the same (just depleted for a major vacation). CC debt is sitting at ~4K.
I like to have checking account with about $500 in it….just as a psychological buffer.
Now….just 2 short years ago I was 66K in credit card debt and was one of those people living on the edge. My ATM receipt would have shown about $500, but that was all the money we had.
Now we have the CC debt almost paid off and are slowly moving towards being in control of finances. We screw up every now and then, but it’s a slow process.
So, you would see the same thing now as you did 2 years ago….but the situations are VASTLY different.
I didn’t think the tone was accusatory, he left an out saying some people keep a lot in savings, and he knows his audience here are going to be the type of people who have a lot in savings. And I think we can all agree that there at a LOT of people who fit his, admittedly kinda made up, theory.
Maybe it’s my mood today, but I read through the posts and 3/4 of them are “not I” posts and while a lot of them were simply chiming in their opinion on his theory many seemed not only defensive but almost self-congratulatory.
Most people don’t have money. They don’t save and they live lives that most of us would have a heart attack over in the same situation because of where our ther-money-meters are set. This is why we have things like Social Security and bankruptcy. Apparently people can’t be trusted to save for their own retirement and many people don’t pay their bills (I know bankruptcies are often caused by special circumstances but many aren’t, or they are special circumstances that wouldn’t have broken most of us here because we would have been prepared).
Of the original list I am going to make an even more unsubstantiated judgment: I bet from the numbers that the second, third, and fourth guy on that list have their $ lives under control and the others are functionally clueless. And I bet that would reflect the general population: 3/7 are great, and 3/7 are questionable, and since I’m completely making this up I’ll grant one of those that look bad is a sleeper reader of GRS.
As Mindbender says above (#21), I have no doubt that there are plenty of people on the financial edge. While receipt-litterers may not be a representative sample, you also have to think about all the people who don’t even use banks.
The so-called “underbanked” rely instead on pawn shops, check cashing services, and payday lenders, which charge far more outrageous fees.
So, for every person who has $10K in savings, I have no doubt that there are two or three people with $200 balances and one or two more with no bank account at all.
My suspicion is that the the littering of ATM receipts, the low balances and the high/frequent ATM fees are all tied to people who are careless, who do not deal with things.
I went to the ATM with a very wealthy uncle of mine to go get some chips at the corner store one summer. He saw an ATM (one of those ones on wheels) by the checkout and decided he needed cash to go on a fishing trip that was coming up in a few days. I showed him how it worked and he took out 10k right there in the middle of some Quik-E-Mart. I almost fainted, then wondered if we were going to get mugged walking to the car. I think the 3 dollar ATM charge didn’t bother him in the least.
I’m sure umpteen people already pointed this out, BUT many people maximize their interest by keeping only enough to pay their bills in ATM enabled accounts. The rest go into money markets (emergency funds) and investments.
Actually, I’m one of those people that usually doesn’t have money in the bank. Almost never. And yes, I hate it. And to answer the question, I used to sleep, never.
Then I got it.
I have very, VERY high expenses compared to most people, I would think. School loans, child support, legal fees, car payments, insurance, personal loans… everything eats into my paychecks. But those times are changing.
I already pay very, very few ATM fees, which I find downright… hideous, evil, and wrong. I also don’t pay much money for food or clothing. Nor do I spend much time going out for any reasons.
But I have goals.
1. By this time next year, I will continually have a minimum of 4 figures in the bank at all times.
2. My fixed expenses are pretty high. Therefore, to get the most out of my job, I need to up my income level. So I’m getting an additional certification in my field, which would up my take up salary by a conservative 20%.
3. Some of my payments are on the verge of dropping off, like my car payment, a huge chunk, which ends next year. I will then run that car into the ground.
4. I have created a budget with realistic numbers from actual research, and I will be able to set that into motion immediately next month.
5. I have savings accounts with high yield interest rates.
Unless I get married (possible) or have additional children (extremely unlikely), I will have money left over. That money will go to creating my 3 month emergency fund cushion and form the backbone of my daughter’s higher education. Then the turnaround is on, assuming all things remain equal.
-by the way, the two job thing is a trap. Taxes killed me when I worked a primary and secondary job.
Interesting thoughts re: the ther-money-stat. Mine is set pretty high — I get antsy when the checking account dips below $4k. This is largely because I use the one checking account, but have it subdivided into virtual “envelopes” in my own gnuCash records — mortgage, groceries, insurance, eating out, utilities, etc. The extra “buffer” money that isn’t allocated anywhere is usually only about $500 or less.
The savings account contains a lot more, and contains the “envelopes” for longer-term goals and emergencies — car fund, emergency fund, etc.
You did point out that those who leave their ATM receipts to the wind are a self-selecting group, for whatever reason; you would never find my ATM receipts flying around. 🙂
Also, your comment about conflict often centering around differing ther-money-stats makes sense; I am glad that we got that worked through relatively early on in our marriage (money was a considerable stressor before then) — we worked out what our shared goals are, and we discuss the budget regularly, and he leaves the actual implementation up to me. Every once in a while when he sees the actual balances, he says, “I can’t believe we have that much!” and is about to start talking about how to spend it. But then I show him how it’s all allocated, the way that we agreed on, and that sobers his thinking considerably.
I think its a little strange that you collect other people’s ATM receipts. Don’t you think its just a tad stalkerish? I was a janitor at a mall for a year in high school most of those receipts are from teenagers or people that don’t care about their money. You can always tell the people that take care of their money because they don’t play $3 to touch whats already theirs.
I get paid, I pay the bills, and I put between 10% and 20% away for savings (Money Market, retirement, investments, etc). What is left is the money I use to pay myself for the month.
That is the money that would show up on my ATM receipt, if you found it lying on the ground. Which would not happen as I hold on to my receipts until the end of the month and then burn them with the rest of last month’s bills after I balance my accounts.
I have never kept a lot of money in my primary checking for 2 reasons: There are better places for that money, and it is too easy to spend it.
I would argue, that if you are A) not totally loaded and B) keeping thousands of dollars in your primary checking account, there are better places for that money.
Finally, as many others have mentioned, what is up with ATM fees lately. Most (All?) of these people paying $3 at the ATM are most likely getting dinged for a $1 by their bank. Holy smokes! I have been giving a lot of thought to going all cash. Maybe that will be my 2010 resolution.
Actually, so long as it’s well protected, keeping large sums of money in your primary checking account can be advangateous. Some banks are currently offering as much as 5.01% on checking balances, provided you meet certain monthly requirements. That’s above and beyond the 1.2% being offered on money market and savings accounts.
A lot of assumptioms have been made based on incomplete evidence. Today, the day before payday in our household, our checking account may not have much money in it. We’ve paid all our bills and they’ve cleared the bank; my husband and I have taken out our personal spending allowances for that two-week period; we’ve bought groceries, gas, etc. using our debit card; and we aren’t letting substantial amounts sit around in checking. What an ATM slip of ours wouldn’t show is the $80,000 in cash parked in money market accounts nor the more than $500,000 in retirement accounts, a small mortgage balance that will be paid off in 4 years, and no car loans.
Even if there was a $3 charge because we didn’t have time to drive to an ATM at one of our bank’s branches, the ATM slip wouldn’t tell you that — because of our prestige checking account — we can take those slips to our bank for a refund — without any limit each month. I think I just dropped off $10.50 in receipts on Monday for reimbursement for the last two months.
Making assumptions about other people’s finances from their ATM receipts is no more accurate than judging people by what’s in their grocery shopping cart. Let’s stop judging what other people are doing and focus more on how what we’re doing is working for us as individuals.
I think that the fact these people leave the receipts behind could indicate that they’re in financial trouble (judging by their flippant attitude just leaving the receipt for anyone to see), but low balances don’t necessarily indicate they’re in a lot of trouble financially. When I am out of debt, I plan on always having at least several hundred dollars in my chequing at all times, but I imagine I will move some of the money into savings and investment accounts too. Luckily I will be out of debt soon and I am still young enough that my bad college finances didn’t screw me over for life!
As far as paying the fee goes, I agree with you there – many people who pay it simply don’t care, and they don’t question it, and probably don’t avoid it, either. I try to avoid ATM fees as much as possible, but I do get 3 reimbursements per month as part of my banking package if I use another bank’s ATMs.
It bugs me how so many people say “I move my money out of chequing because it’s making no money in interest”. These same people will often get hit with those awesome $30+ overdraft fees, and still not learn their lesson. What’s the point in keeping a close to zero balance if you don’t have to? My friend recently got hit with almost $100 worth of fees simply because she always moves most of her money to savings. I told her that the $100 she paid on the extra fees is several years worth of savings account interest!
my atm receipt would look the same as these! reason: after we pay our bills & take out our cash allowance i douche the account into our savings. i do leave about 20-40 for an emergency gallon of milk, etc. i keep to-the-penny tabs of my account so this method works for us.
You’d get a heart attack if you saw my balance ’cause there is a serious (approved) overdraft 😉 All my debt, except the student loan, is on this one account and while I do owe a little less each month it still is very low.
Hopefully it will soon be in the blacks after I graduate.
Anyway. Randomly collected receipts probably do indicate the current level of economic performance of the account owner. I suspect that people who comment here, about their conscious decisions to move money to savings accounts, are probably not representative of the general population.
To second several minority commenters here (Amanda, ebyt), why risk a super-low balance in your checking account? Is the extra few % interest worth the peace of mind? I won’t argue with the budgeters though, do what works for you.
Note also that *this* crowd is not a statistically accurate view either, by any means. Most people here:
(a) had bad money habits in the past, and are keenly aware of them
(b) possess above average understanding of savings and emergency funds
(c) actively use techniques to get the most out of their money (high yield savings, frugality, etc.)
I agree with JD (from my statistically inaccurate sampling of people I know) that many people live very close to the edge.
To assume that a majority of people transfer most money out into savings for budgeting or yield sounds unlikely… hopefully a fairly significant minority, but I even doubt that based on all the general consumer evidence around me.
On another note: thanks for another year of GRS, JD! You’re helping a lot of people achieve that minority status 🙂
I think the people who are talking about Robert making assumptions from one atm receipt are missing the point that it is just there to jump off into a more interesting discussion.
Robert, on the question of whether people can turn around, I think they can. In my days of mega debt (over $80k all up) I would live pay to pay, my account was always overdrawn to the maximum, I’d switch between my 6 or 8 credit cards to use the $20 or whatever was left on there. But I turned it round, quite successfully.
Now it’s hard to say where my magic point is. I’d say maybe around $10k cash makes me relax. A few months ago we bought a new house and refinanced our investment properties, and the amount of debt and the monthly repayments (if they weren’t rented) put me into terror mode and I cancelled our christmas. But then we got that $10k behind us, and I realised that our budget allowed us to pay everything comfortably even if rates went up by 3%, so I relaxed again (plus I worked out our net worth – debt and account balances are only half the story).
Personally I’ll feel a lot better once we have $30k in a buffer, but I’m also quite comfortable using our credit cards for any temporary setbacks – we never carry a balance and all debt issues are well behind us.
When I was in college, that’s about what my account look like (except I’m not a litterer) but I knew almost to the dollar how much was in there and never bounced anything. My comfort level is higher, but then again I usually don’t know to the dollar how much is in my checking anymore.
We can assume we know what is going on (something bad), but I would be the first to admit 1 atm stub does not make a complete financial picture.
It is nice to think that people will change, but reality says they won’t.
Average is average for a reason. Most people live paycheck to paycheck. Most people have little savings. Most people use credit cards. And most of those people carry a balance and pay interest.
Most people borrow money to buy cars. And Houses. And groceries.
Sure, some have their ducks in a row, and you see many of those people here on your blog, but your readers represent a miniscule percentage of the average population.
The average person will not change. If they did, they wouldn’t be average.
And if everyone somehow got their act together and started getting rich slowly, then no one would be rich at all. If everyone had a million dollars, having a million dollars wouldn’t be impressive. It would be average.
It is noble to think everyone can change. And while that is true that everyone has the ability, most all of them will not.
Take a random sample of 100 people. 5 of them get it. They control their life.
The other 95 let their life control them.
JD. The reason you are getting rich slowly is becasue most other people aren’t.
My checking account has a maximum of $250 since I keep the bare minimum there for withdrawing cash. However, my overall financial portfolio is in excess of $750,000. So you see it just makes no sense to spend any time drawing conclusions from discarded receipts.
I agree that it’s probably a skewed sample… The people who hit the “print receipt” button and then let it float off into the street are probably the same people who don’t keep track of their funds.
Wow..a ton of assumptions in the post! Some MAY be accurate but as lots of others have pointed out, its pretty silly to assume in this day and age that people who have small balances in their checking accounts are on the edge financially.
I myself am waiting to make a big transfer on January 1st, so I have moved money from an online bank to my checking account (TFSA in Canada, can’t put new money in until January 1st). So my ATM receipt would show zero fees but over $10k in it. But normally it would be just the minimum to keep me from paying any fees plus a few hundred extra for expenses since the majority of it goes to my mortgage and my savings account after each pay day. *shrug*
Speaking of comfort levels, last winter I found out that Mom had $40,000. in a totally non-interest bearing checking account! When I suggested that we explore alternatives such as ING, she asked what if there was an emergency – what if for example, I needed to borrow money from her right away? I told her that if I ever needed tens of thousands in cash RIGHT THIS VERY MINUTE, it would probably mean that I was doing crack and that she shouldn’t give it to me! Since she was afraid that her lifelong bank might “get mad” at her if she opened an ING account, we went right down to the bank and at least moved it into a relatively high interest bearing account. I guess that was some degree of progress.
My Ther-money-stat’s changed a lot as I’ve gotten older.
Once when I was student (about 20 years old) I had to split-purchase to buy $7 worth of groceries – $3 from eftpos and $4 cash because that was all the money I had. I wasn’t that stressed at all – often really hungry though.
I don’t keep much money in my checking account. I don’t risk much by keeping it low because I learned how to add/subtract when I was around 3 years old. In other words, I don’t overdraw even if it gets <$1. I have free checking with no minimum.
I don’t really pay ATM fees for many reasons. For one I use a bank that has local branches. If I really needed cash from an ATM I would just go to one of my banks. If I need to access my account I could always use my debit card at POS, which also allows cash without charge. But why would I even need cash? I can’t think of any purchase I make that requires cash. I know this is a never-ending debate here, but I am one of those folks who spends MORE if I take cash out.
My ( U.S.) ATM always asks if I would like a receipt for this transaction.
Most people aren’t well-off financially. A lot of financial columns are written by 6 or 7 figure people making assumptions about the majority of people who barely get by. I think most people, even those with substantial income, are “check to check.” WE know this isn’t ideal, but it’s the norm.
We don’t have ATM fees in France, but we have minimums.
That is, a friend of mine would look for her bank for hours because this way she could take out 10 euros: the other banks had a minimum of 20 (all banks were like that, if it’s not your own bank, 20 is the minimum to withdraw, if it is, you can take 10).
And you see, she never took more than 10 euros at at time – it was too much for her.
On the other side of the fence, I knew someone who made a comment that he didn’t understand why people would take out any less than the maximum allowed (500 euros). Well, for one thing, that was more than my monthly paycheque, how is that for a reason?
Me, I’d never use ATMs unless I had to shop in a store with a minimum for debit (a lot of them have a 10, 15 or even 20 euros minimum for debit, in which case I pay with cash).
I disliked cash, that you can’t track, that you can lose, that people can steal from you.
I lived on cash for around 6 months using the envelope method, but I’m still relieved to go back to debit. And since here there usually isn’t a minimum for debit, I just don’t take out cash ever.
This being said, if I did, my balance would be fairly low, as my money is taken into my savings account automatically, and only the essential is left in the chequing account (same as others here)
Bytta @ 151 Days Off says23 December 2009 at 20:46
Self righteous? Really, Robert? 🙂 I talked about the superiority felt by personal finance practitioners in my blog and you have proven my point. I feel the same way myself. Cheers :).
Like many of the comments here, I agree that many people these days transfer a bulk of their money to an interest-yielding account, rather than keeping it in the day-to-day account. To say that they are on the brink of bankruptcy and use the money for reckless spending is… well, a reckless generalisation.
You won’t like how much money I leave in the checking account at all time ($100-$200) but I have 2 years worth of living expenses for 2 people in my savings account. I would feel uneasy if I only have 4-figure fund left in my savings account.
My main checking account currently has $8.43 and the linked Savings account has just under $1,800.00.
My other “savings” account has in excess of $15k spread between Money Market and CDs. This account is shrinking a bit as I’m using some of this money to pay down my Mortgage.
I don’t pay ATM fees nor would I put myself in that situation, but want to point out that the fee charged by the banks is there for a reason. It is a fee for the convenience of accessing your money at any time in a convenient location. Banks pay maintenance on those machines, and someone to service the thing at least once a day (I reasonably assume). The fee may be high, but the alternative is to have to go to your bank during busineess hours or not be able to access your money when you need/want it. Convenience comes at a oost.
First time poster here, after reading for many months. I’ve got accounts at 2 banks, and depending on which bank you’s see my ATM from, you’d get a different story. One of the first posts I read here about 6-8 months ago was concerning high interest checking accounts. After reading the article I promptly opened an checking account with NBRS with a 4.26% rate. THANKS!! It is not down the street from me, but I have business in which I pass by 3 branches a few times a month so it works great for me. I now keep every penny I can scrounge together there, and use my closer bank just occasionally.
If you found a discarded ATM receipt, (which you wouldn’t cause I’m a anti-litter freak, lol) I may have a $2 fee for using the ATM to get money from my NBRS bank. I get reimbursed for that fee, so I don;t sweat it, but I would have to be be desperate for cash to actually be charged for an ATM fee.
That said, from my personal experience with friends, I would say the majority of those discarded ATM receipts do represent people living day to day, and blindly paying fees.
As far as people changing there financial habits..it’s absolutley possible. I’m slowly working on helping a friend of mine. I found out he was deliberately paying close to $50 extra a month on late fees to his mortgage. I freaked on him, lol, and he basically told me they live month to month (on a decent salary) and that once he got behind he just settled into that routine. I convinced him to take some extra money he earns in a 2nd job, get paid up, then he will save close to $50 a month. He did that, and thanks me every month now that he is back on track. I can also see the financial wheels spinning, so I think he is starting to see the big picture. I’m hoping anyways!
As I scanned through the messages it seemed like most people keep far more of their (liquid) money in a savings account. I define liquid money as anything used for bills, short term savings and an emergency fund. I am assuming that people move money from one account into another in order to receive a higher ROR.
I’m curious, if a high interest checking account, I believe the one referred to had a 5.01% interest rate, offers a higher interest rate than a money market or a savings account, does it benefit someone to move money out of that account into another account that pays a lower interest rate?
I understand the psychology of keeping a separate savings account if it limits cash spending but is it really advantageous if you’re receiving a lower interest rate? Specifically, what is the advantage to keeping $200 in a checking account that pays 5.01% interest while keeping $10,000 in an ING account paying 1.3% interest?
I am new to this site and am trying to understand why (based on previous posts) so many people seem opposed to keeping “liquid” money in a checking account. If my goal is to maximize my ROR on “liquid” money it seems like I should put my money where it will receive the highest interest rate.
Regarding the transaction slips from the ATM. I always take the paper receipt as confirmation and/or proof of the transaction. I shred it at home later on.
I wouldn’t litter and I certainly wouldn’t give anyone the opportunity to have even a small glimpse into my finances by leaving my transaction slip behind.
You could make several assumptions with picking up these receipts. Granted, some of these people may be finacially disadvantaged and would live from payday to payday, however I don’t think that you would find shrewd money people keeping large sums of money in a standard savings account.
I always choose the ‘no receipt’ option, but if I did get a receipt it would look a bit like these, minus the fees (most ATMs in the UK don’t charge fees, at least not for my cards, and I wouldn’t use the ones that do unless I was totally desperate).
As others have said, I’m not sure that looking at people’s receipts really gives an accurate indication of their financial lives, although I do agree that littering could be associated with disorganised finances.
I agree with the idea of a financial thermostat – I keep a low minimum balance (about £100 – £200) in my main current account since most of my money is used for bills or savings, although this amount is lower than I’m really comfortable with. My business is still getting off the ground, so my income is pretty low right now, but as it increases, the balance I maintain will rise about 10x to match my real financial thermostat.
When I was younger and a student, I lived very close to the edge financially (permanently in my overdraft, no savings to speak of) and it didn’t really bother me. I changed my attitude after getting into credit card debt, and later having a ‘light bulb’ moment, and am definitely much more risk-averse these days.
We currently have 3 savings accounts and 2 checking accounts. Both linked checking accounts have lower rates than their savings counterparts. Currently credit the local credit union savings is offering the highest interest rate, though not by much. If one of the checking accounts had a 5% interest I would definitely move the liquid assets to it. However, I’m done chasing 3-6 month promotions to increase interest for a little while. At some point the complexity just isn’t worth it.
Wow, such conclusions you’ve made by finding 7 receipts. I have a theory too. Since the bank is right next to Motley Fool Intergalactic Headquarters, the receipts are naturally from Motley Fool employees. The people you feel so sorry for are your colleagues.
I haven’t sifted through all of the other comments to see if this was already covered but I wanted to bring up a few points.
The first two assumptions made about other people’s habits seem like a pretty big jump to conclusion in my opinion.
Concerning the assumption about people having very small bank accounts (and the implication that their credit card debt is ‘much bigger’) – I personally only keep about $10 or so in my regular checking account. When I get paid every other week, I take out any bills that need to be paid as well as other forecasted, and somewhat irregular, expenses (groceries, gas, etc.) then I take everything that’s left and move it on over to ING for savings. With all the push of using online banks, I’m suprised the author didn’t consider this.
Now to the how-could-anyone-pay-so-much-money-to-get-to-their-money assumption. Since my regular bank (a state employee credit union in a state I no longer live in) has only a few branches they reimburse atm fees (up to $4 a month for my bank but I know this varies – some even cover all atm fees!). Since I know I’m getting that money back at the end of the month I have no problem paying $3 to get the $40 that I need to get something I really want (depending on if I have $40 in that account to begin with, see above).
Anyway, I’m not sure if this helps evolve the authors perception about other people’s habits but I hope so.
Why is every anecdote on this site an excuse for self-righteous preaching?
Just because $700 is peanuts to you, that’s plenty to most people. For the millions of disabled and elderly Americans, that’s more than a month’s income/expenses (and if you’re on Medicaid you can’t have more than $2000 saved anyway, so you have to make sure to spend it). For any low-income person that might be a perfectly reasonable buffer to have in a checking account.
I balance my checkbook regularly so that at the end of the month I should only have about $500 in the account, even though it fluctuates up to about $6000 in the middle of the month.
If you actually want to educate people, stop guessing and judging and bring some actual facts and information to the table.
I keep more than $10 in my checking account. I am too lazy to move money all around just to get a measly 2% per year on it. If you keep an average balance of $2000 – that’s only 40 bucks a year, not really worth worrying about in my opinion. Of course the numbers would scale based on income and assets – but 2% is never going to make anyone rich, so unless you have a lot more time than money…
Unfortunately I can’t access my bank account as whenever I do the ATM simply erupts into flames and the city block loses power…probably has something to do with the ridiculously high amount of money that is in my account.
As for the article, careless people throw out their bank receipts and when you act a certain way in one scenario chances are you will act the same way in another scenario. There is a lot of extremely private information on a banking receipt and most people I know guard them viciously, clearly these thrower-out-ers simply don’t care.
Then again, if my huge sum could actually fit on to a piece of paper then I would make millions of copies and throw them all around the country just to show people how awesome I am. I’m cool like that.
Is my bank the only responsible one that doesn’t print much info on a receipt? They know they can blow in the wind or misprint so it has my name, last four digits of my account, and the transaction information. You’d get more personal info by googling me.
and Sarah @125, I think people are commenting more on the ~$50 balances than the $700 balance.
My Ther-Money-stat is set to about $20K for my checking account, because my credit cards are automatically linked to the bank account. It’s a convenience thing.
Reading through the comments though I have way too much money ($650K) sitting around in terrible interest bearing accounts, collecting nearly zero or less than 1%. Have another few hundred K in ING collecting a whopping 1.5% a year.
I guess for a spread of less than 1% I’m ok to let the money sit, so long as it doesn’t get lost by a bank failure…
Saving up to buy a nice house in cash but the way the gov’t is trying to prop up the housing market I may have to wait until 2012 to make a move…
You couldn’t collect my ATM reciet because I haven’t used one since college (1979). I overdrew my account once and threw out the card!
If you did see my checking balance you would assume that I am not doing so well. I don’t leave more than monthly allowance in my checking and that gets withdrawn bi weekly.
BTW- I LOVE this type of article. It makes me think. Thanks for having him guest post!
Based on your findings though I think you must also take into account where you find the slips. If they are from a 7-11 in a poorer part of town you may see something very different than on the ATM slips outside of the Fool HQ!
For whatever its worth, I pay no heed to ATM fees whatsoever, and am willing to accept any and all because (a) my bank never charges me one, and (b) my bank refunds the fees changed unto me by other ATM owners.
Although many financially savvy individuals do keep low balances in their checking accounts (like I do), I’m sure most of these financially savvy people are also like me and never use an ATM unless they take out a large enough chunk to make it more worthwhile ($300 or whatever the daily max would be).
Thus, these people trying to get a $20 bill out of the ATM probably don’t have any more money than what you see on the receipt. Very sad.
A bit off topic: I haven’t used an ATM in years. I put all my spending on rewards credit cards and pay them off each month. I pick up cash in person at a branch of my bank that is right next door to where I work. Ironic, eh? ATMs were originally touted as a way for banks to save money on tellers. I used ATMs exclusively for my banking from sometime in the 1980’s until about 2002. But the high ATM fees and the usual inability to reliably check my bank balances at an ATM now makes me avoid using ATMs. I hope banks never catch on and start charging fees to use the teller!
Addressing the littering issue, I’ve come to some conclusions; While walking along roadsides, the litter I see is largely fast-food wrappers. Seems to me that if someone disrespects their body enough to eat this stuff on a regular basis (I’m not completely bashing fast food, I eat it too, but on occasion), they probably won’t have much respect for their environment either. The earlier posting (#5) about people throwing garbage out their front door into the gutter outside their house made me think of that, seems a matter of lack of respect for self overall. Sad.
I didn’t read through all the comments, but I wanted to add my own fun fact. I once found a receipt in Wawa (a local gas station that has free withdrawls) with $351,592 as the balance.
Likely this person just sold a home, or was about to buy one, but I thought about the implications for awhile. What if they really did just keep that much money in their checking account? Crazy.
I just went to the ATM machine last night and a receipt was left there. The account had nearly $64,000 sitting in it. What are they thinking? Wells Fargo checking accounts earn next to nothing in interest.
I know many of you commenting are obviously in great financial shape, but the tone on these posts is down-right depressing.
Personal circumstance: I don’t always have a lot of money left over at the end of each pay. I don’t have an emergency fund. I do have a credit card, which has about $1000 dollars owing on it and I’m working on dropping. I have a mortgage.
I also have a partner who can’t work (physical disability) and a daughter in private school (too smart for the public school system to cope with – definitely unexpected expense). I have a good stable job.
Does it bother me that I don’t have an emergency fund? Sure does. I know I am living with an element of risk. But I am doing the best I can in my circumstances and am reading blogs like this to see if I can do more to improve the rate I improve my families financial circumstances. We don’t want to downsize our house to fix the school fees problem because our house is built to suit my partner’s disability (not an easily found thing).
Don’t judge people by their bank balances – you want to help people with their financial health and knowledge? Great – start by being a bit more openminded.
(I know I am taking personally some of the comments, but I finding that improving my own financial lieracy apparently means my self esteem gets routinely beaten up..
There are 138 comments to "Where’s your financial comfort level?".
That’s a lot of unexamined assumptions! If you picked up my ATM receipt, you would see something similar, but the real story is this:
– Checking is always low, especially at the end of the month. I send everything that matters to savings, and make transfers when necessary. There’s no reason to keep $8000 sitting in a checking account in this day of electronic transfers and instant balance inquiries.
– The checking account has overdraft protection via savings. This doesn’t cost me anything.
– I pay the extortionate $3 ATM fee without blinking because it is refunded by my bank up to 10 withdrawals per month. I have a great bank. 🙂
It’s hard to say from just one checking account. My account that I share with my wife is usually hovering around the 50-100 range. When we get our paychecks, we pay the bills, put money in our savings account, spend our fun money and hold on to a bit of cash in the checking account for gas and miscellaneous expenses. The majority of money is in our savings account as I think it should be. I’d rather have a higher cushion than $100 but to have almost $9,000 in what I’m guessing is a non or very low interest bearing account is crazy.
Also, ATM fees are the devil. I kick myself when I don’t plan far enough ahead and have to pay them – which isn’t often.
J.D.,
One thing you may also want to consider is that some people (such as myself) keep a very low balance in their checking account. Many of us keep just enough to pay the bills; and transfer the rest to a higher yielding savings account such as eTrade or ING.
Merry Christmas and Happy Holidays!
I’ve never understood why people leave their receipts behind, or chuck them on the ground. When you withdraw cash (at least in England) the machine will ask you whether you want a receipt, so why would someone say “Yes” if they don’t actually want it?
@John I don’t remember ATM machines in the US having that option but the simple answer is because people don’t care. I hate littering but I see it so often that I’ve gotten pretty jaded about the issue.
After seeing a person literally throw trash out their front door into the gutter in front of their house, I see that some people absolutely couldn’t care less about not living in an area surrounded by filth. And yes, trash trucks came to that area to pick up twice a week.
I agree with rzrshrp, it is tough to tell from one account. I get money out of my checking account as quickly as possible just so I won’t be tempted to spend it – every cent is budgeted so I know exactly what’s going where. That said, because I’m so obsessed with where every dollar is going, I normally wouldn’t withdraw cash ever. Everything’s carefully managed between automatic withdrawals, etc.
For me, my ther-money-stat freakout alarm sounded when I realized that we only have about 1.5 months worth of expenses in the saving account – ACK!!! We don’t have any credit card debt, but are still paying on cars, a house, and student loans – DOUBLE ACK!!!
Even though our family makes what most Americans would consider to be a VERY healthy salary, we’ve moved to a beans-and-rice and otherwise minimal spending lifestyle. I don’t want to wake up when I’m 45 or 65 (we’re in our late 20s) and then realize that I’ve only got $70 in the bank account.
don’t these receipts have account numbers on them? I would be concerned some unscrupulous person would take that info and have some fun.
That being said, it is rare that I withdraw money from an ATM. If I need, I’ll get cash back when I am grocery shopping or make some other type of purchase. If you saw the balance in my checking account you might think I was living on the financial edge, but like rzrshrp I don’t keep a lot of money in my checking account, maybe $100 a week for gas or incidentals and as a bit of a cushion. I prefer to keep money in a savings account unless I need to use, and then I will transfer to checking if necessary.
Oh gosh, the ATM! Cash gets me in so much trouble. If I have cash I spend it! When I use my card, I can track that, so it makes it more real. I just talked about this yesterday on my blog:
http://ultimatemoneyblog.com/its-the-small-things-too
Great post! I am going to check out your site now!
It’s kind of creepy but also fun that you’re collecting these. Almost like a sociological experiment.
As for the ther-money-stat question, mine is the pile of cash sitting in our ING account. Sure, it’s meant for a down payment, but with that pile sitting there I feel invincible.
If I got fired tomorrow it would suck, but I’d be fine.
Now, after we buy a place…that will change…
I agree. Different people can have vastly different comfort levels regarding extra cash in checking. However, checking account balances can be misleading. Personally, I have about eight dollars in checking at the moment. I also have almost ten thousand in savings and over 100-thousand in retirement accounts.
By the way, ATM fees are for suckers. 🙂
I wonder about concluding anything from this. Every pay check gets direct deposited into my checking, but quickly gets transferred out, so my ATM receipt if I used the ATM would show a small account balance. Also, many banks rebate the ATM fees charged to their customers from other banks’ machines, so some of those $3 fees are really zero.
I think the ther-money-stat theory holds some truth and is exactly the reason my husband and I choose to keep our checking account balance low, shoving whatever money we can over to savings. From week to week I keep only what we need for the next few weeks’ budgeted expenses plus a small cushion in checking. The balance rarely drops below $200 but also never exceeds $1200-$1500 (which may not seem substantial to some people but it is well in line with our income and expenses.) The savings account is linked to a checking account so that money can be made instantly available in case of an actual emergency or planned large expense but keeping that money out of the “spending” account keeps it from being spent.
I agree with others, you cannot really say how much money these people really have in the bank…
At the start of the month I transfer all the budgeted money into their respective savings accounts and subaccounts, leaving not very much in the checking account (around 100euro or so)
whenever I need the money I transfer it between checking and savings (I have free transfers between my accounts, as well as free ATM), and I’d rather have all my money in various savings accounts giving me interest than having it stay idle in the checking account…
so if you’d find my ATM receipt (which you won’t :-> ) you would also think I’m a poor guy with lots of debt, but you’d be rather wrong :->
Less than $100 stands out to me. I don’t do much spending from my checking account, so I try not to keep too much in it, but I don’t like to have it below $500. You’d also see some ATM fees (not usually $3), but they are refunded to me at the end of every month.
We keep a $500 buffer in checking, in case of an error on our part or some other issue, but the revolving balance is usually over $1K, but this is usually because some check is uncleared. All the real money is in ING, a bank CD or our small retirement accounts.
I always go to the same ATM, which is where my bank is. Fees are for people who can’t plan out when they need cash.
I agree totally with the idea of a thermostat for money. One of the biggest things I have had to learn to do was to trick my thermostat into letting me save more. It’s not that I couldn’t save, or that I wanted to spend all that much, just that a really large emergency fund balance looked and felt so weird; I couldn’t sustain putting money aside. I had good retirement savings, but my emergency fund was stuck at $5k for a few years.
So I stopped trying to save a large lump sum and built a yearlong monthly CD ladder, each CD in the amount of my new mortgage payment. It was a psychologically significant amount, and it was small and manageable. Now I have an emergency fund that’s four times what it was before I had a house. It’s an easy six month’s living expenses (probably a year with unemployment).
Another trick is using my checking account only for the month’s expenses. I budget by the squeaking sounds it makes; it’s frequently below $50 at the end of the month. I’ve been doing that for years and it works really well for me.
I always look at the abandoned receipts too. 🙂
They seem to fall into 2 groups. People who tried to withdrawl $100 (or some other relatively small amount) and didn’t have enough in the account, or people who withdrew some amount and have a balance of $10,000 or more.
I assume the first group discards the receipts out of anger and the second out of indifference. I often wonder why someone would keep $10,000 in a checking account. Do you really need access to that much money on a regular basis?
I usually try to keep a minimum of about $1000 in our checking account, and $1000 in a linked money market account. Almost all our financial transactions are electronic and we put everything we can on our credit cards (and pay them off every month) so it’s not unusal to have a credit card bill upwards of $1000. With other bills being deducted automatically, there would be too great a risk of overdraft with less. And with interest rates so low right now, it’s not like there is anything better to do with the money.
One of the first things I did to dig myself out of debt (and a habit I continue to this day) was stopping paying ATM fees.
Not only did it save me 3-15% of all the cash I pulled out, it forced me to think about when I needed cash and better plan my spending. I couldn’t just leave the bar and walk across the street to an ATM, I had to plan beforehand how much cash to take, because the ATM there charges a fee.
These little changes in behaviors add up.
I agree with the other comments on here. J.D. does make the comment that we don’t know what other accounts they have, but we keep our checking account balance higher than one month’s rent. I figure if there is enough money to cover our largest monthly expense, almost all other incidentals should be less expensive. For real emergencies, there’s savings which has more than the checking account and earns a lot more interest. As far as ATM fees, we almost completely ignore them now because our bank refunds all of our ATM fees (include a $6 ATM fee we incurred on vacation a few months ago!).
Funny, I used to this in college. But our current ATM receipt wouldn’t look much better since our day to day accounts are kept pretty low, $1000 or less, more often $500 or less. But we have cash in other accounts, savings, other checking accounts not tied to our ATM cards and in our ING accounts.
My ATM receipt might also show a charge to access cash (although probably not since most times I hit my own back) but my bank refunds three ATM charges a month.
Although the responses here would indicate that many purposefully keep their checking acct totals low as a strategy to maximize interest earned or as a psychological move (keeping money out of sight, out of mind), I have little trouble believing that the receipts you have sampled indicate exactly what it looks like- people who are chronically living on the edge of bankruptcy and playing money roulette.
Most people just don’t think about managing their finances or how much they pay to withdraw money at an ATM.
I think the solution is education. Anyone can achieve financial freedom if they learn how to manage their finances and increase their income. It doesn’t matter how smart they are. It doesn’t matter how much money they make. It doesn’t matter how much debt they have.
That’s one reason I love this blog and similar financial blogs. People can begin to learn about finances, and how to make money (like from having a blog!). That can lead to books, CDs and seminars. Through that kind of education, anyone can learn the skills to make as much money as they want.
@Minderbender – I agree. Many of the receipts I find show the person is trying to withdraw $100 and it is denied because the account only had $70. Living that close to the edge AND not even knowing how close you are, is not a good combination.
My receipts will have a very low balance too since I place most of my money in online accounts. I only use my brick and mortar bank for deposits.
Scientifically, I agree you can’t tell anything from this experiment. However, I do find it fascinating. I find it interesting to observe behaviour of people I come in contact with throughout the day.
I would guess that, even if it is a self-selecting sample, the results wouldn’t be accurate (for lack of a better term) than most statistics that are thrown around currently.
Concerning my comfort level, I’m probably young enough to be used to being poor so the fact that there is less than $1000 in our checking account, while slightly worrysome, is not a freakout point yet. My wife and I are slowly working to keep maybe $1500-$2500 in checking while paying off student loans, building the EF, and paying off our CC. The CC are atleast low and really are just slightly larger expenses from the last couple of months that we paid upfront with the card and are paying off in installments now. Her card is at 0% interest now and accrues money to pay down her student loans which is a pretty nice perk for now. Hopefully as we get more settled and better at tracking/predicting our expenses, we’ll move our ther-money-stat up a bit.
Psh. I have a checking account just for my allowance and if you saw the balance thinking it was my everyday checking you’d be *stunned* (it’s currently about $10). It’s fun money, I’m allowed to spend it on frivolous stuff, and keeping it in a seperate account keeps me from over spending.
Plus, the bank refunds any ATM fees incurred on that account, so I don’t worry about them.
I like having my checking around 1k. It makes me feel better. Especially as I generally use my debit card for everything, so if I had an emergency happen to my car or some other emergency, I could probably just use my card. Anything bigger, and the situation would probably take a few days to work out and I’d have time to transfer funds.
On getting the receipt – I like getting mine, but not keeping it. If I get the reciept, it confirms my account balance. Otherwise I end up having to go through the ATM menu completely twice: once for the balance and once for the funds.
I don’t have any problems with the balance a person has but I do take a huge issue with ATM fees. I told my Mom that she paid quite a bit in ATM fees and she said she knew but was too lazy to go up to the bank. When the next bank statement came in, I added up the ATM fees and she was agog at the total. Needless to say, she now goes to the bank or does cash back at the register when grocery shopping. Personally, I hate the idea of paying to get my money. It’s enough I put in the bank for them to use it to make more money; but to charge me……..No Ma’am/Sir!
On a side note, I wonder how many of the reciept thrower aways (made up words) spent money on shredders protecting their information only to leave a major part of it on the floor for all to see?
That can be deceiving. If someone picked up my receipt they would think I had 20.00 to my name. I keep a very low balance in my checking account and transfer all other money to my higher yield online savings account…i also get my ATM fees refunded each month by my bank…so I’m really not paying anything to get my money…
The older I get and the more entrenched I get in life, the larger amount of money I need to feel comfortable…20,000 is my new comfort level…
i work as a nurse and emergencies happen…to everyone…i do not want my financial life ruined by one…
I’m a bit surprised at those low numbers, too. When I was younger (20-30) my ATM receipts would have looked like that (but never below $100). When I bought my first home (27) I would have kept enough to cover my bills and outstanding checks plus one months mortgage – so you’d see close to a thousand dollars in my checking account. Today I still abide by the same requirements – however my house and mortgage payment are bigger now so you’d see more in my account (but not quite the $8000 the one person had).
As for money market savings I used to be comfortable with a few thousand in that. But as I got older and had more financial responsibilities I had a bigger savings account. Now I am not comfortable unless I have enough to buy a car in my savings. That money should get me through most any major emergency. Someone mentioned $20k, that’s about right although in light of recent economic times I’m keeping more than that.
The comments are good, but I think most people are missing the point of the article. I think the ATM receipt approach is kind of a stretch for what is a good topic. I understand what Robert is saying.
After receiving my paycheck, and accounting for bill transfer, 401 contributions, and other savings contributions, I aim to have $500 – $700 cash for 2 weeks of expenses (which is usually more than enough). However, if for some reason after all my transfers, I end up with, say, $900-$1000 in checking, I tend to think of some “want” that I can now comfortably afford. Sometimes, I put that cash in savings.
Conversely, if after all my transfer and bills, I am left with only say $400 – $500 for 2 weeks, it makes me a little uncomfortable, and I start to think about pinching pennies a little bit so as not to have to go to savings for back up.
It’s the psychology of money and how we handle it.
I think it is indicative of today’s society. We tend to overlook common sense for convenience. My DW will withdraw funds from the nearest ATM rather than travel a bit to make the withdrawal from our bank. Lectures about the fees incurred fall on deaf ears. The value of time trumps the value of money.
I think you make too many assumptions. My checking account is always low just before payday. When we get paid we pay the bills due before the next payday and everything else goes immediately into investments or savings with the exception of a ~$200 cushion.
As for the fees, you don’t really know what’s going on. Perhaps this person is primarily “cashless”, needed cash for a certain transaction, and there were no branches of his bank nearby.
This post spoke to me because I was one of those people. I figured if I have $10 left in the account, no worries. And yep, the $3 wouldn’t have slowed me down at all. I am thankful that I reset my thermostat!
There is something that is being over looked. If you’re reading the blog post on “Get Rich Slowly” you are probably concerned about saving, investing, and building wealth. If you have been following any of the advice on this site, or used common sense for that matter, you probably have a reasonably comfortable amount of money in your savings accounts that can be transferred to your checking account relatively quickly.
But, I think the article is relatively accurate in capturing the spending and savings habits of the average American. Remember only in the last year has the savings rate of the average person in America crept above 1%.
So yes, have pity for most of these people. As a CFP and professional in this realm try to help educate them (even if it is the manner of free workshops). If they are in the same boat I was in, or J.D., or many of the readers here found themselves in not so many years ago, they are lost and looking for answers, and hope that they are able to find security and peace of mind in their finances.
Count me among those who would have a low balance on the account from which I withdraw the cash – it’s just my slush fund, the only account where I take any sort of money from in the first place. My “real” money lives elsewhere. Furthermore, I don’t mind the ATM fees because I use a credit union that refunds them at the end of the month (Navy FCU.) So I think it is not clear, what someone’s situation is from leftover receipts.
I do absolutely agree with you on the littering thing, though. Jerks!! I also would not be surprised to see a correlation between those who litter, and those who have little regard for tidy finances.
You would find the exact same thing if you were to find an ATM receipt of mine…though I don’t often withdraw cash, so good luck finding one!
My financial comfort level is essentially zero dollars. I’ve been broke and homeless, so a low balance in my bank account doesn’t affect me like it would some. Not to mention, my expenses are almost nothing and being a student, I don’t expect to have a large bankroll.
To me, there are worse things than a small bank account. Whenever I do get money, I use it to pay off my Student Loan balance so I’m not choking on debt later in life. I’d rather apply the money towards a debt than leave it in my bank account. I save for expected expenses such as car insurance but for the most part it is money in, money out.
Its an easy budget to have…zero balance. Your money is already spoken for and has a purpose. If you don’t have it, you can’t spend it.
I don’t think any conclusions can really be drawn for these receipts. My pay check is direct deposited and immediately either A) spent to pay off the last 2 weeks of purchases on my credit care, or B) transferred into various savings accounts. My balance, 24 hours after getting paid, is just over $100 and stays there til I get paid again.
I Used to do like operate 3 accounts & I have kept 1 for ecs and the other for paying bills,the last one as my personal
I remember when I was 19 and I would have $40 left on my overdraft protection ($250) and my little bookstore paycheck would get me barely into positive territory.
I’m sure some people really do have $20 left. People say things like that to me sometimes, that they’ve got X amount till payday. Some people are always cutting it close.
I always have about $2k in my checking account. Anything below that and I put the brakes on spending anything. Reading the other comments, that seems higher than most, but it’s a joint account and the $10 in interest each year that I’m not making is well worth it in piece of mind.
Conversely, when the balance creeps up, I always transfer it to a high-yield account. I guess that’s my ther-money-stat.
You mentioned not knowing the backstory to the owners of these accounts — here is one:
I’m actually embarrassed to say that at 46 this is the first year that I have taken the effort to read personal finance blogs/books and have taken extreme steps to turn my finances around.
The fact is that I left my parent’s blue-collar, lower-middle class home just before turning 18 and half-way through my senior year in high school. I lived a comfortable life but never learned money or practical skills. I used to joke that I never wanted to draw up a budget because I would have to face the fact that I didn’t make enough money to live, which is the truth. I’m amazed that I was actually able to graduate that year and follow it with a year attending secretarial school.
Long story short, the years of working as a secretary to cover my basic existence continued until I woke up one day and was 40-years-old. It is sad that I was sleepwalking through life always reacting instead of acting. Working paycheck to paycheck becomes a way of life until a lightbulb goes off and you realize that you are an adult and don’t have to be a victim of circumstance. I often think if this is my story, how hard it must be for those born into low-income households where I’m sure money management is a larger issue.
As with everything, education is key, but not all people know where to find the information they need. They may never know that this information exists and like the younger me laugh at the idea of a budget because it would only highlight the sad fact that they already know — they can barely survive on what they make.
You would probably be suprised by my ATM receipts. I refuse to pay to get my money out however my balance is very low. That is because my checking account pays next to no interest. So I keep most of my money in the savings account and move it to the checking account as necessary. I only need 3 days to move from my high interest account and no time at all to move from my lower interest account (the true “emergency fund”). I am also an accountant by trade so at any given time I know exactly how much money is in the accounts and what of that money is already spoken for.
Haven’t read the previous posters, so please forgive me if what I say has already been said:) But, would like to point out that, my ATM receipt would be something similar. For-
1) I use debit card for day to day purchases, so I like to have only minimal amount in my ‘checking account’. So as to limit spending
2) After payday, I have automatic transfers to my savings and money market accounts at ING and to the money market account of a local credit union
3) My checking a/c is a bank account which I posesses since Grad school days and only because its conveinient, i am still with that bank. My money never accumulates in the checking account coz it gets channeled to right sources and paying off bills.
ATM receipts are not indicative of how wealthy and how financially responsible an individual is;-)
I also would like to say that i never do ATM transactions. I always do cash backs from a Pharmacy/Supermarket, since there is no charge on it:)
I have a pretty low balance by the end of the month, but I do NOT litter. Or pay fees, unless I’m traveling–I have a fee-free ATM within walking distance of my house.
As long as my checks will clear, I don’t worry about the balance in my checking account. My ther-money-stat setting is more about the combined balances in my checking, savings, and money market accounts. I can move money around between them instantly if I need to.
Once the emergency fund drops below $1000 I get a little concerned. It’s good to be prepared for problems and knowing I have something extra lets me rest a little easy.
“Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there’s three to six months’ worth of living expenses in an emergency fund?”
Probability = zero.
When you have no conception of the value of money; whey you pay ‘whatever is asked’ for something, you just don’t get it.
Sadly, these people are poor, will always remain poor, and don’t know how to make things better for themselves.
The “ther-money-stat” concept is right-on and probably related to an inner debt pain tolerance.
HOWEVER, I agree with much of what my fellow readers have said up to this point. You’re making a lot of assumptions here about people’s balances on their receipts (though you do rightly point out that this is a self-selected group).
On top of everything else, we should be looking at the average balance, too, not just what happened at one point in time. This data should be available somewhere and would make a much better lead-in for the concepts you discuss.
Glad to know I’m not the only guy that looks inquisitively at the discarded ATM receipts.
We don’t keep much more than $1k in our local bank account, preferring to keep most at ING where we earn some interest. You’re right though, having under $100 would make me take action.
I think your right about the theory of people having a comfort level that the try to maintain. I’m used to having very little in my checking accout — sometimes even less than a dollar, although $20 is more common — because I immediately distribute my cash to savings, bills, and investments. I almost never spend cash. Right now I have about $800 in there and it’s bothering me that I haven’t had time to distribute it.
I have made these same observations, that people don’t even care about the receipt astonishes me.
John DeFlumeri Jr
@Mark W. (#47)
Bzzzzzzttt. Wrong answer. I have to disagree with you completely on this.
First of all, just because somebody has a low balance in their bank account doesn’t mean they’re poor. It means they have a low balance in their bank account. It may also mean (and I think it frequently does) that they’re living paycheck-to-paycheck, but that doesn’t mean they’re poor. As I’ve frequently said, I used to live paycheck-to-paycheck on $42,000 a year. In fact, I was exactly one of these folks that Robert is describing in this article. (Except I would never pay an ATM fee. I think I paid one once, and that’s because it was an emergency.)
But where I really take issue with your comment is this: When you have no conception of the value of money; whey you pay ‘whatever is asked’ for something, you just don’t get it. Sadly, these people are poor, will always remain poor, and don’t know how to make things better for themselves.
These people do not have to always remain poor. (Or, more accurately, remain financially illiterate.) Not at all. As I said, I was one of these folks. Five years ago, this article could have been about me. Today I’m a completely different man.
People can and do make changes. In fact, I’d be willing to wager that many GRS readers have had this sort of transformation, or are in the middle of doing so. I think the “these folks can’t change” mindset causes a lot of harm. Seriously. I think this attitude is dangerous and damaging. The challenge is to find a way to reach these people, to show them how to make things better for themselves. But if you believe they can’t or won’t ever change, there’s no incentive to try to help them.
Me? I believe that people can change. Most of them want to change. But most folks feel trapped. They’re limited by their own ignorance. They don’t know what they don’t know. That’s how I was, anyhow. And I got out of that by listening to what others had to say. Now it’s my mission to share what I learned…
I agree that the receipts cannot give anything conclusive. The only exception is the ones who try to take out $100 and get denied. That is a big indicator of someone who spends until they run out.
If you don’t know that your bank balance is so low that you cannot take out $100 that means, at least to me, that you don’t track spending at all! You keep going to the ATM until it says “no” and then wait for the next paycheck and eat Ramen until then. (ok maybe a bit extreme but you get the point!)
I also agree that education is the way. I took a personal financial planning course in college as an elective and I was shocked at how little people kept track or even knew about managing money. Most of those people left “enlightened” and at least had a fighting chance of living below their means. It was one of my favorite courses in college and put me on the path to learning a lot more about finance. I have a Finance degree too.
The bottom line here is that in personal finance, and in life in general, we all tend to learn in the same manner: “The Hard Way”. It takes a major event for us to react and make real changes. If we can get to people before that happens then we win!
– Foo
The problem is the lack of knowledge on these people’s parts. Moreover, it’s a struggle from day to day. They don’t think ahead and thus never have money in the money, they can’t see past today’s needs, and thus will always be stuck in the trap. It’s truly sad.
In this college town, there are ATM machines near a lot of the downtown bars, and I suspect that a lot of the discarded receipts would show the effect of students who are taking out money to drink with… without thinking about it. Students who are living from small paycheck to small paycheck — well, who may not actually be responsible for their largest expenses, and so aren’t so concerned about how much they have in their accounts…
#52 Thanks JD!
And… it also bears pointing out that the truly poor usually do not have any banking. They’re termed the “unbanked” and there’s a nice sized literature on whether or not it’s rational to use expensive check cashing services rather than a real checking account when you’re at poverty-level. (There’s also a literature on how to get banking to the unbanked, as we middle class and up people all *know* how rational it is.) It is a difficult cycle to escape, especially if you’re poor and have even the slightest (even below-average) self-control problems.
One of the chapters in a fantastic and thought-provoking scholarly book called Insufficient Funds does a really good job summarizing the literature and argues that this perpetual cycle of borrowing at exorbitant rates from check cashing centers may actually be less costly that having to deal with check overdraft fees and fees for just having an account. We usually think of checking or saving as being no-fee, but when you’ve had trouble with checking or savings or can’t afford to stay at some minimum, free checking is impossible to get.
@JD & Mark
Thank you for addressing that so quickly, JD. Add me to the list of GRS readers who would have paid $3 to withdraw $20 less than a decade ago. Ignorance is not the same as inability. Ignorance is remedied with knowledge, and I think many of these “poor” people simply don’t know there is another way to live. I know I didn’t. Then I got a job working for a bank, which showed me bankrate, which led to my discovery of PF blogs, and bam! six years later you wouldn’t catch me dead paying an ATM fee (or interest on a CC for that matter.)
People do change.
Is it just me or do some of these posts feel a little defensive? It almost seems like he’s looking at some of YOUR receipts and you feel the need to explain yourselves. As a previous poster pointed out, I think a couple of these people might have a stash of money somewhere. But I have known too many people who live like that to think it isn’t completely plausible that some of those people have exactly that much money to their name. A friend of mine once had to walk into the bank to withdraw $10 because she had <$20 in her account so she couldn’t go to the ATM!
The ther-money-stat is true of everything. We all have a comfort level of cleanliness, activity, and spending that can be difficult to overcome. Over the last few months we have been dealing with my sister in law, who is a casual user of drugs, but her main problem is that she’s a loser. One psychologist we spoke to warned us that bailing her and her husband out in small ways as they spiral downward is a VERY BAD IDEA because they redefine normal downward, and their normal is well below what we would expect. In his words “three boxes of Cherrios and they’re set.”
I know plenty of people who have changed their way of thinking, usually after a major life change: getting married, buying a house, having kids. As far as forcing someone else to change, it won’t happen. But it wouldn’t surprise me if some people are behaving outside their ther-money-stat and don’t even realize it. They are uncomfortable and don’t really know why. As always in that case small changes are the best way to go. They are easiest, and less scary than a complete life change.
You actually need to pay a fee to withdraw your own money from an ATM? Now that’s something new to me. We don’t pay such fee in Singapore. And I think to charge such a fee is pretty ridiculous.
Cheers~
Mark
What I’m thinking. Two things.
1. They could be very smart. Around here, a regular bank account pays practically nothing in interest (mine is at around 0,1% I think). Having anything more than day to day expenses in there is useless, so they could be one of those who have a savings account somewhere.
2. As you said, we all have different comfort levels. I wouldn’t be comfortable but for some people, having an extra 70 bucks CAN be a security blanket. When I was still in school I lived “on the edge” every single month. A lot of students do. If I had 70 bucks extra I felt rich.
Oh, and those ATM fees, I have paid those on occasion ie whenever I’m abroad and withdraw cash.
While I find the concept of collecting people’s ATM receipts rather peculiar, I find the “financial thermostat” concept very interesting.
I feel that much of this is subjective based on the individual’s income and level of comfort, nevertheless, if proven true, it seems that alot of these individuals may not be exactly “frugal.”
Given the statistics on the amount of Americans that use savings accounts, I believe it is HIGHLY unlikely that these individuals have money stashed elsewhere, as a checking account (where the majority of cheques/ automatic money transfers are deposited) are usually the main place people maintain their cashflow.
While I feel that comment#47 was a bit extreme, I do feel that there is some substance to what he said in the psychological sense: YES there are people out there (like our beloved J.D.) who do revolutionize their spending and savings habits, but is this very common? NO, I do NOT think so.
We GRS readers are from a select group of individuals who DO want to change and improve our habits, but as J.D. mentioned before, despite the recent economic downturn etc. the majority of people simply do not.
Their “Financial Thermostat” was likely set years ago, as habits before 25 years of age are quite difficult to alter for the majority of people. (As a psychology major, I’ve seen these statistics time and time again.) Not to seem pessimistic, as anything is possible, but the evidence usually doesn’t lie.
Interesting article. 😉
PS. Ever notice Robert’s guestpost articles on GRS seem to frequently fall flat and into much controversy? While I think he’s a talented writer, he is also quite opinionated which I feel tends to “rock the boat” on here frequently.
I totally agree with J.D (#52). I used to be the one paying the fee to basically steal from myself. That was when I didn’t have any money and so it felt like “What’s another $3 on top of the nothing I already have?” (I never littered though!)
Now that I have begun to educate myself and frequent GRS, my ther-money-stat is a bit different. I now know exactly how much my expenses are and how much I should have left over. If I’ve paid all my bills, I should have about $1000 left in checking. If I get below $600 I start to worry because it means I have overspent. If I have over $1000, I move the extra to my Emergency Fund which I am trying to build up to a 6-month amount.
The main difference for me has been education. If I technically did not know how much my expenses were, then I could live in denial and pretend everything was fine when I had $2 in my account. Now that I know what I need to do to survive and get ahead, I won’t allow myself to get back to that low point.
Saving money is a skill, and like any skill it can be learned. This skill is not always a function of class as many presuppose. I readily recall a friend, who was a realtor, told me that two attorneys came in to purchase a house and had a total of $5K to put down, while a guy who owned a laundromat had a bank account with a balance of over $500K. Some people just have the accoutrements of wealth, a lavish home, huge cars, clothes, purses, exotic vacations. In stark contrast, others chase the substance of wealth, fiscal security. Parents cannot teach their children what they do not know. A vast amount of American citizens come from families of origin that struggle, and struggle has defined their entire life. Their children do not grow up expecting more. You do better when you yearn for more. Normalcy may be a function of your peer group. The Internet is the great equalizer – you can expose yourself to so much more. The GRS blog and the MSN Money Message boards challenge me to realize that my fate is in my own hands, that I do not have to live from paycheck to paycheck that lifestyle inflation is a choice, and that I do not have to be saddled with debt indefinitely.
@Shara: The “defensiveness” you are noticing is probably generated by the tone and assumptions of the original article. Those of us whose ATM receipts or bank statements look like this, even though we’re in control of our finances, feel judged.
Count me in as someone who keeps an eagle eye on her money, but whose checking account gets pretty darn close to zero every two weeks because I am saving every penny possible in ING!
#61 “PS. Ever notice Robert’s guest post articles on GRS seem to frequently fall flat and into much controversy? While I think he’s a talented writer, he is also quite opinionated which I feel tends to “rock the boat” on here frequently.”
I think the term isn’t “fall flat” but perhaps “generate interest” or “provoke thought” Controversy isn’t necessarily a bad thing when it promotes thoughtful discussion.
I also don’t think the atm slips necessarily tell a whole lot… a lot of online accounts will reimburse atm fees 100% and if you’re banking online it’s relatively easy to keep the checking balance low and the savings balance high. But hey, the guy is from Florida (according to one of those linked posts), and the general thermoneystat idea is still an interesting one.
I’m betting most of the low account balances are college age students.
I know when I was a college student, ever now and then, my checking account balance would get very low… I had a brokerage and savings account in addition to my checking account though too. Another reasons I think the accounts might be college-age students is because they are willing to incur a $3.00 withdrawal fee (because the bank isn’t there at home bank…). After all if it were a normal persons account, $3 out of $20 is a 15% loss on getting that money out (hopefully all of us way out of college folks know that)!
Wow, $3.00 that hurt just typing that… What a rip off…
Several someones asked, “Who keeps big balances in their checking accounts?” I do, because it is easier, and I never worry about having enough money to do what I want. I have 2 checking accounts, each with a balance of ~$25k. Only one has a debit card, which I use for everyday expenses and bills, and the other is reserved for annual or semi annual expenses like taxes and insurance.
I’m thinking about making changes to my setup, after reading this site for the last several months, but for the last couple of years, I haven’t had any problems with high checking account balances.
Another thought, those who read GRS or other PF blogs are a self-selecting group as well. We tend to want to change our ways and socialize with people who want the same thing just like many of the people who throw ATM receipts on the ground. Both groups of people demonstrate a skew in one direction or another from the actual average and median.
Still, as I said before, while this sort of “experiemnt” can’t/won’t prove anything, it is an interesting and thought provoking exercise.
J.D. your comment at #52 is great. You’re a wonderful example of someone who’s made significant changes and come a long way.
I think you’re right about most people as well. They want to change, but they’re not sure where to start. They also need some accountability – someone to spur them on and ask how they’re doing. That’s why the GRS community is so great. People are willing to help each other and discuss ideas on how to improve.
As for these people with the low checking balances – I’d say it’s hard to tell what’s really going on there. I just know I wouldn’t be comfortable with such a low balance.
A friend of mine showed me his ATM receipt once and he had $12,000 in his checking account. I was shocked at the amount (I was 21 at the time and that was a lot of money to me). But he said it would be all gone that week paying off debts from his divorce. He is crap with his money tho so I think he was shocked to see that much in his account as well.
Fascinating about these receipts tho! Whole stories behind them.
I just checked my Chase balance – it’s $4,430.13, and I’ve already passed the “wow, that’s lower than I’m comfortable with” level. It’s been an expensive month *and* it’s right before payday, which is always when bank balances are lowest.
But if you were to look at an ATM receipt, it would show a $405.73 balance, because I have four different accounts set up at Chase, between which I can instantly transfer money. The total balance of all four is over $4400, but only $400 of that is currently in my main checking account.
I also have other accounts with much bigger balances – my 401k and my Schwab account, but I can’t transfer funds from those to my checking account instantly if I need to. I don’t have any credit cards.
But if you found my ATM receipt, it would say $405.73 on it, and you’d assume I had a bunch of credit card debt. If you’d found an ATM receipt a couple weeks ago, it could have said I had $15,180.96. That was right before I paid off my car. My net worth and financial security have changed very little in the intervening two weeks, but my main checking account balance looks drastically different.
Maybe some of these bank accounts belong to children or teenagers? 😛
It is interesting also to note that they are taking money out of their account instead of “floating” it an paying in one payment at the end of the month.
Cash is a poor vehicle for storing and/or growing wealth.
I’ve been thinking about the “ther-money-stat” and I realized that mine is VERY cautiously set. I see lots of commenters posting that they keep a very low amount in their checking accounts, and that they are always aware of the big picture so it’s no problem. Intellectually I know they’re right, but the thought of doing that myself makes me a feel a little tiny burst of panic inside. I keep $700 OVER my no-fee minimum. Even though in 4 years of careful financial tracking I have only once ever gone over by mistake, and then only barely! But there’s just something in me that doesn’t trust myself, and so I keep more than I really need to in my checking to avoid the possibility of incurring fees. It probably doesn’t make financial sense, but it does make me feel at ease.
I agree that the idea of financial thermostats causing difficulties in marriages is one worth writing about more.
When a person is happy with 1K in the bank, but the other wants/needs 10K in the bank in order to feel comfortable, it IS an issue. It is not easy to deal with.
My company instituted 8% paycuts, took away our 401k match and cut about 25% of the workforce over the last year. I went from aggressively paying down my mortgage to aggressively beefing up my emergency fund. $20K is about my comfort level for my savings, $1K (about my mortgage) is my “ther-money-stat” level for my checking account.
There have been a few surprises over the year that caused a dip in savings and I’m trying to figure out how to be less panicked when that happens. It’s what it’s there for, right? To not have to take on more debt? I also find myself running the numbers over and over. We are getting the paycuts rescinded and our matches back next year, and plans that were shelved for security have to be looked at again.
As a single person with a mortgage, is 6 months of savings really enough? Should that be gross or net? How do I balance purchasing a new (to me) car? Do I take on a car payment or risk getting stranded in the middle of nowhere in hopes of paying cash in a year or two? Do I halve my emergency fund to pay for it now?
How do you confidently calculate your risks? As a person that has made really, really expensive mistakes with every large purchase I’ve made (flaky car replaced with flaky car, old house with way more repairs needed than I anticipated etc). How do you know that you are making the right decision or that you won’t regret “good enough”?
I agree that, while many of us here strategically keep low balances, the receipts in this experiment are probably from folks at the other end of the spectrum. I think that’s because of the littering and the ATM fees.
When I was out of college I was living on the financial edge. I had student loan debt, didn’t know how to negotiate salary so was making next to nothing at a full-time admin job, and did not have a budget. I would get down to $8 in my checking account and often was overdrawn. I just thank my lucky stars that, at that time, credit card companies weren’t targeting college students so aggressively; I only had one department store credit card. It took me years to climb out of the student loan debt and turn my financial habits around.
Now I have two checking accounts; one for necessities, the other for discretionary spending. I get uncomfortable if either falls below $100, though that is rare. I have $20K in an emergency fund, over $100K in retirement, my car was paid off this year, and I have $130 in CC debt which will be paid off at the end of the month. A lot of my good habits have started since reading this blog.
By the way, even in those dark days I never threw my ATM receipts on the ground… 🙂
I’m gonna go out on a limb here and say that what you have with those low balance people is most likely what it really is because of the low withdrawal amounts.
I’ll use myself as an example. I tend to have very little in my checking account but I also take out a lot because I use the envelope method for budgeting. I also always turn down the receipt if given the option OR throw it away so you’d never find mine LOL
I am still very much in money rehab mode, paying down debt, and many times am still on the paycheck to paycheck cycle. But, I have two savings accounts with a combined total of about $1200 and a 401K with over $12K in it even though I’ve only gotten serious about money for about a year.
Unfortunately, most of my friends’ ATM receipts look just like some of those (if not much worse) and I can tell you they’re in pretty much the exact financial situation you’ve painted. They tend to make withdrawals under $100, pay fees out of desperation, and carry small balances if not overdrawn ones.
By the way, I also would like to point out that we ARE in an economic recession and while many GRS readers are very responsible and carry small checking balances but have heaps of money elsewhere you have to remember you are a very small (but hopefully growing) minority. Most Americans are in trouble financially especially right now so just statistically speaking, I’d guess the chances of those receipts belonging to a GRS-type are slim to none.
I’m amazed that people don’t take their ATM receipts or at least don’t choose the “no receipt” option. Perhaps that’s not available on all ATMs? Pay a fee? No way!
Right out of college, I lived paycheck-to-paycheck for about six months, until one month when my company screwed up and didn’t get me an expense reimbursement check on time. I didn’t have enough money to pay both the rent and the Amex bill (charge-card, had to be paid in full). It arguably wasn’t my fault, but it was my problem, and I found it terrifying. I paid the Amex bill, took a cash advance on my personal credit card to pay the rent, paid off the cash advance the second I got the expense check, and decided that I was never going to let that happen again.
And five years later, I haven’t. These days I keep enough money to pay an average month’s work expenses (which is around a month and a half of my personal expenses) in a savings account at the same bank as my checking account, so I can transfer the money over immediately if I don’t get my expense check on time. I also have accounts at ING — a long-term emergency fund and a car fund.
Here’s the interesting thing: My ATM receipts while I was living paycheck-to-paycheck would have been pretty much the same as my current ATM receipts. My overall comfort level was completely reset by that experience — but the changes I made all involved my savings. If anything, I let my checking account get lower now, since I’ve got a slush fund to back it up with.
If I only had a few hundred left to my name, I’d be really panicking. I do know someone like that, and his situation is so bad, it gives *me* panic attacks. He’s about $4000 in debt, has NO savings, and will run his checking account down to $15 or $20 each pay period just to pay the most basic of bills. He lives on minimum wage and has no benefits at his job (and due to circumstances that happened 25 years ago, no hope of ever getting better employment).
Although I don’t have as good as most folks here, I’m thankful that I don’t have it as bad as that person I just wrote about. My checking + savings combined never drops below a couple thousand (if it ever did drop, I’d panic). I try to keep a $100 cushion in checking at all time in case of bank errors. And I’m paranoid about keeping records…I’d NEVER let an ATM receipt blow away. They get taken home and filed.
I hate, *hate*, *HATE* ATM fees, and I’ll do anything to get around them whenever possible. Usually I just pay for things using my debit card, but if I actually need cash for something, I’ll try to find a credit union ATM (here in WA, the credit unions have an agreement to let their members use each other’s ATMs without fees). Or I’ll go to the nearest Wal-Mart/Target/Safeway/etc. that allows me to buy something trivial (yet useful) and get cash back with my debit card.
If I am forced to use an ATM that charges a fee I will withdraw at least $100 to make it “worth my while” and keep the fee to a small percentage of the transaction. I suppose that really doesn’t make much sense–after all, if I withdraw more money than I need at the moment then I’m more likely to spend it. The idea of paying $3 to withdraw only $20 instead of $100 just seems excessive, even if $20 is all I really need at the time.
And any receipt I have from an ATM or a debit card purchase goes home with me, and once that transaction has cleared my bank it gets shredded (unless I need it for warranty purposes or a potential return/exchange).
I don’t think you can tell that much from ATM receipts, although it’s kind of fun to spin a story around I guess. Personally I’m another of the “almost nothing left in chequing because it’s all been transferred to savings/investments/bills” people.
I once found an ATM card and receipt sticking out of the machine when I went to get some cash, here in Toronto late one saturday night. I looked and the balance was more than $32,000.
@Dar. Either way you’re out three dollars but I understand the feeling. Paying 3$ (plus the fee my own bank adds on top of it) to get my own money makes me feel like an Idiot.
I transfer all money from checking to ING into various subaccounts for different budget areas. I use a CC for all purchases throughout the month and pay it off in full at the end of the month. EF is currently sitting just under 1 month of expenses (in ING) and the ‘fun fund/vacation fund’ is around the same (just depleted for a major vacation). CC debt is sitting at ~4K.
I like to have checking account with about $500 in it….just as a psychological buffer.
Now….just 2 short years ago I was 66K in credit card debt and was one of those people living on the edge. My ATM receipt would have shown about $500, but that was all the money we had.
Now we have the CC debt almost paid off and are slowly moving towards being in control of finances. We screw up every now and then, but it’s a slow process.
So, you would see the same thing now as you did 2 years ago….but the situations are VASTLY different.
@KAD
I didn’t think the tone was accusatory, he left an out saying some people keep a lot in savings, and he knows his audience here are going to be the type of people who have a lot in savings. And I think we can all agree that there at a LOT of people who fit his, admittedly kinda made up, theory.
Maybe it’s my mood today, but I read through the posts and 3/4 of them are “not I” posts and while a lot of them were simply chiming in their opinion on his theory many seemed not only defensive but almost self-congratulatory.
Most people don’t have money. They don’t save and they live lives that most of us would have a heart attack over in the same situation because of where our ther-money-meters are set. This is why we have things like Social Security and bankruptcy. Apparently people can’t be trusted to save for their own retirement and many people don’t pay their bills (I know bankruptcies are often caused by special circumstances but many aren’t, or they are special circumstances that wouldn’t have broken most of us here because we would have been prepared).
Of the original list I am going to make an even more unsubstantiated judgment: I bet from the numbers that the second, third, and fourth guy on that list have their $ lives under control and the others are functionally clueless. And I bet that would reflect the general population: 3/7 are great, and 3/7 are questionable, and since I’m completely making this up I’ll grant one of those that look bad is a sleeper reader of GRS.
As Mindbender says above (#21), I have no doubt that there are plenty of people on the financial edge. While receipt-litterers may not be a representative sample, you also have to think about all the people who don’t even use banks.
The so-called “underbanked” rely instead on pawn shops, check cashing services, and payday lenders, which charge far more outrageous fees.
So, for every person who has $10K in savings, I have no doubt that there are two or three people with $200 balances and one or two more with no bank account at all.
My suspicion is that the the littering of ATM receipts, the low balances and the high/frequent ATM fees are all tied to people who are careless, who do not deal with things.
I went to the ATM with a very wealthy uncle of mine to go get some chips at the corner store one summer. He saw an ATM (one of those ones on wheels) by the checkout and decided he needed cash to go on a fishing trip that was coming up in a few days. I showed him how it worked and he took out 10k right there in the middle of some Quik-E-Mart. I almost fainted, then wondered if we were going to get mugged walking to the car. I think the 3 dollar ATM charge didn’t bother him in the least.
I’m sure umpteen people already pointed this out, BUT many people maximize their interest by keeping only enough to pay their bills in ATM enabled accounts. The rest go into money markets (emergency funds) and investments.
Actually, I’m one of those people that usually doesn’t have money in the bank. Almost never. And yes, I hate it. And to answer the question, I used to sleep, never.
Then I got it.
I have very, VERY high expenses compared to most people, I would think. School loans, child support, legal fees, car payments, insurance, personal loans… everything eats into my paychecks. But those times are changing.
I already pay very, very few ATM fees, which I find downright… hideous, evil, and wrong. I also don’t pay much money for food or clothing. Nor do I spend much time going out for any reasons.
But I have goals.
1. By this time next year, I will continually have a minimum of 4 figures in the bank at all times.
2. My fixed expenses are pretty high. Therefore, to get the most out of my job, I need to up my income level. So I’m getting an additional certification in my field, which would up my take up salary by a conservative 20%.
3. Some of my payments are on the verge of dropping off, like my car payment, a huge chunk, which ends next year. I will then run that car into the ground.
4. I have created a budget with realistic numbers from actual research, and I will be able to set that into motion immediately next month.
5. I have savings accounts with high yield interest rates.
Unless I get married (possible) or have additional children (extremely unlikely), I will have money left over. That money will go to creating my 3 month emergency fund cushion and form the backbone of my daughter’s higher education. Then the turnaround is on, assuming all things remain equal.
-by the way, the two job thing is a trap. Taxes killed me when I worked a primary and secondary job.
Interesting thoughts re: the ther-money-stat. Mine is set pretty high — I get antsy when the checking account dips below $4k. This is largely because I use the one checking account, but have it subdivided into virtual “envelopes” in my own gnuCash records — mortgage, groceries, insurance, eating out, utilities, etc. The extra “buffer” money that isn’t allocated anywhere is usually only about $500 or less.
The savings account contains a lot more, and contains the “envelopes” for longer-term goals and emergencies — car fund, emergency fund, etc.
You did point out that those who leave their ATM receipts to the wind are a self-selecting group, for whatever reason; you would never find my ATM receipts flying around. 🙂
Also, your comment about conflict often centering around differing ther-money-stats makes sense; I am glad that we got that worked through relatively early on in our marriage (money was a considerable stressor before then) — we worked out what our shared goals are, and we discuss the budget regularly, and he leaves the actual implementation up to me. Every once in a while when he sees the actual balances, he says, “I can’t believe we have that much!” and is about to start talking about how to spend it. But then I show him how it’s all allocated, the way that we agreed on, and that sobers his thinking considerably.
I think its a little strange that you collect other people’s ATM receipts. Don’t you think its just a tad stalkerish? I was a janitor at a mall for a year in high school most of those receipts are from teenagers or people that don’t care about their money. You can always tell the people that take care of their money because they don’t play $3 to touch whats already theirs.
I get paid, I pay the bills, and I put between 10% and 20% away for savings (Money Market, retirement, investments, etc). What is left is the money I use to pay myself for the month.
That is the money that would show up on my ATM receipt, if you found it lying on the ground. Which would not happen as I hold on to my receipts until the end of the month and then burn them with the rest of last month’s bills after I balance my accounts.
I have never kept a lot of money in my primary checking for 2 reasons: There are better places for that money, and it is too easy to spend it.
I would argue, that if you are A) not totally loaded and B) keeping thousands of dollars in your primary checking account, there are better places for that money.
Finally, as many others have mentioned, what is up with ATM fees lately. Most (All?) of these people paying $3 at the ATM are most likely getting dinged for a $1 by their bank. Holy smokes! I have been giving a lot of thought to going all cash. Maybe that will be my 2010 resolution.
Actually, so long as it’s well protected, keeping large sums of money in your primary checking account can be advangateous. Some banks are currently offering as much as 5.01% on checking balances, provided you meet certain monthly requirements. That’s above and beyond the 1.2% being offered on money market and savings accounts.
A lot of assumptioms have been made based on incomplete evidence. Today, the day before payday in our household, our checking account may not have much money in it. We’ve paid all our bills and they’ve cleared the bank; my husband and I have taken out our personal spending allowances for that two-week period; we’ve bought groceries, gas, etc. using our debit card; and we aren’t letting substantial amounts sit around in checking. What an ATM slip of ours wouldn’t show is the $80,000 in cash parked in money market accounts nor the more than $500,000 in retirement accounts, a small mortgage balance that will be paid off in 4 years, and no car loans.
Even if there was a $3 charge because we didn’t have time to drive to an ATM at one of our bank’s branches, the ATM slip wouldn’t tell you that — because of our prestige checking account — we can take those slips to our bank for a refund — without any limit each month. I think I just dropped off $10.50 in receipts on Monday for reimbursement for the last two months.
Making assumptions about other people’s finances from their ATM receipts is no more accurate than judging people by what’s in their grocery shopping cart. Let’s stop judging what other people are doing and focus more on how what we’re doing is working for us as individuals.
I think that the fact these people leave the receipts behind could indicate that they’re in financial trouble (judging by their flippant attitude just leaving the receipt for anyone to see), but low balances don’t necessarily indicate they’re in a lot of trouble financially. When I am out of debt, I plan on always having at least several hundred dollars in my chequing at all times, but I imagine I will move some of the money into savings and investment accounts too. Luckily I will be out of debt soon and I am still young enough that my bad college finances didn’t screw me over for life!
As far as paying the fee goes, I agree with you there – many people who pay it simply don’t care, and they don’t question it, and probably don’t avoid it, either. I try to avoid ATM fees as much as possible, but I do get 3 reimbursements per month as part of my banking package if I use another bank’s ATMs.
It bugs me how so many people say “I move my money out of chequing because it’s making no money in interest”. These same people will often get hit with those awesome $30+ overdraft fees, and still not learn their lesson. What’s the point in keeping a close to zero balance if you don’t have to? My friend recently got hit with almost $100 worth of fees simply because she always moves most of her money to savings. I told her that the $100 she paid on the extra fees is several years worth of savings account interest!
my atm receipt would look the same as these! reason: after we pay our bills & take out our cash allowance i douche the account into our savings. i do leave about 20-40 for an emergency gallon of milk, etc. i keep to-the-penny tabs of my account so this method works for us.
@ Tim (#95) – Which banks are offering 5.01% on checking account balances?
You’d get a heart attack if you saw my balance ’cause there is a serious (approved) overdraft 😉 All my debt, except the student loan, is on this one account and while I do owe a little less each month it still is very low.
Hopefully it will soon be in the blacks after I graduate.
Anyway. Randomly collected receipts probably do indicate the current level of economic performance of the account owner. I suspect that people who comment here, about their conscious decisions to move money to savings accounts, are probably not representative of the general population.
To second several minority commenters here (Amanda, ebyt), why risk a super-low balance in your checking account? Is the extra few % interest worth the peace of mind? I won’t argue with the budgeters though, do what works for you.
Note also that *this* crowd is not a statistically accurate view either, by any means. Most people here:
(a) had bad money habits in the past, and are keenly aware of them
(b) possess above average understanding of savings and emergency funds
(c) actively use techniques to get the most out of their money (high yield savings, frugality, etc.)
I agree with JD (from my statistically inaccurate sampling of people I know) that many people live very close to the edge.
To assume that a majority of people transfer most money out into savings for budgeting or yield sounds unlikely… hopefully a fairly significant minority, but I even doubt that based on all the general consumer evidence around me.
On another note: thanks for another year of GRS, JD! You’re helping a lot of people achieve that minority status 🙂
I think the people who are talking about Robert making assumptions from one atm receipt are missing the point that it is just there to jump off into a more interesting discussion.
Robert, on the question of whether people can turn around, I think they can. In my days of mega debt (over $80k all up) I would live pay to pay, my account was always overdrawn to the maximum, I’d switch between my 6 or 8 credit cards to use the $20 or whatever was left on there. But I turned it round, quite successfully.
Now it’s hard to say where my magic point is. I’d say maybe around $10k cash makes me relax. A few months ago we bought a new house and refinanced our investment properties, and the amount of debt and the monthly repayments (if they weren’t rented) put me into terror mode and I cancelled our christmas. But then we got that $10k behind us, and I realised that our budget allowed us to pay everything comfortably even if rates went up by 3%, so I relaxed again (plus I worked out our net worth – debt and account balances are only half the story).
Personally I’ll feel a lot better once we have $30k in a buffer, but I’m also quite comfortable using our credit cards for any temporary setbacks – we never carry a balance and all debt issues are well behind us.
Ann:
Obviously, checking account interest rates will differ by bank and geographical location. For me, located in Texas, banks are offering up to 5.01%
The following website will show you the best checking account interest rates available in your area: http://www.checkingfinder.com/community-banking
When I was in college, that’s about what my account look like (except I’m not a litterer) but I knew almost to the dollar how much was in there and never bounced anything. My comfort level is higher, but then again I usually don’t know to the dollar how much is in my checking anymore.
We can assume we know what is going on (something bad), but I would be the first to admit 1 atm stub does not make a complete financial picture.
JD
Sorry man, but I disagree with your comment #52.
It is nice to think that people will change, but reality says they won’t.
Average is average for a reason. Most people live paycheck to paycheck. Most people have little savings. Most people use credit cards. And most of those people carry a balance and pay interest.
Most people borrow money to buy cars. And Houses. And groceries.
Sure, some have their ducks in a row, and you see many of those people here on your blog, but your readers represent a miniscule percentage of the average population.
The average person will not change. If they did, they wouldn’t be average.
And if everyone somehow got their act together and started getting rich slowly, then no one would be rich at all. If everyone had a million dollars, having a million dollars wouldn’t be impressive. It would be average.
It is noble to think everyone can change. And while that is true that everyone has the ability, most all of them will not.
Take a random sample of 100 people. 5 of them get it. They control their life.
The other 95 let their life control them.
JD. The reason you are getting rich slowly is becasue most other people aren’t.
My checking account has a maximum of $250 since I keep the bare minimum there for withdrawing cash. However, my overall financial portfolio is in excess of $750,000. So you see it just makes no sense to spend any time drawing conclusions from discarded receipts.
The Schwab checking account reimburses atm fees.
I agree that it’s probably a skewed sample… The people who hit the “print receipt” button and then let it float off into the street are probably the same people who don’t keep track of their funds.
Wow..a ton of assumptions in the post! Some MAY be accurate but as lots of others have pointed out, its pretty silly to assume in this day and age that people who have small balances in their checking accounts are on the edge financially.
I myself am waiting to make a big transfer on January 1st, so I have moved money from an online bank to my checking account (TFSA in Canada, can’t put new money in until January 1st). So my ATM receipt would show zero fees but over $10k in it. But normally it would be just the minimum to keep me from paying any fees plus a few hundred extra for expenses since the majority of it goes to my mortgage and my savings account after each pay day. *shrug*
You know what they say when you assume.
Speaking of comfort levels, last winter I found out that Mom had $40,000. in a totally non-interest bearing checking account! When I suggested that we explore alternatives such as ING, she asked what if there was an emergency – what if for example, I needed to borrow money from her right away? I told her that if I ever needed tens of thousands in cash RIGHT THIS VERY MINUTE, it would probably mean that I was doing crack and that she shouldn’t give it to me! Since she was afraid that her lifelong bank might “get mad” at her if she opened an ING account, we went right down to the bank and at least moved it into a relatively high interest bearing account. I guess that was some degree of progress.
My Ther-money-stat’s changed a lot as I’ve gotten older.
Once when I was student (about 20 years old) I had to split-purchase to buy $7 worth of groceries – $3 from eftpos and $4 cash because that was all the money I had. I wasn’t that stressed at all – often really hungry though.
Now I need to save every month or else I panic.
I don’t keep much money in my checking account. I don’t risk much by keeping it low because I learned how to add/subtract when I was around 3 years old. In other words, I don’t overdraw even if it gets <$1. I have free checking with no minimum.
I don’t really pay ATM fees for many reasons. For one I use a bank that has local branches. If I really needed cash from an ATM I would just go to one of my banks. If I need to access my account I could always use my debit card at POS, which also allows cash without charge. But why would I even need cash? I can’t think of any purchase I make that requires cash. I know this is a never-ending debate here, but I am one of those folks who spends MORE if I take cash out.
My ( U.S.) ATM always asks if I would like a receipt for this transaction.
Most people aren’t well-off financially. A lot of financial columns are written by 6 or 7 figure people making assumptions about the majority of people who barely get by. I think most people, even those with substantial income, are “check to check.” WE know this isn’t ideal, but it’s the norm.
We don’t have ATM fees in France, but we have minimums.
That is, a friend of mine would look for her bank for hours because this way she could take out 10 euros: the other banks had a minimum of 20 (all banks were like that, if it’s not your own bank, 20 is the minimum to withdraw, if it is, you can take 10).
And you see, she never took more than 10 euros at at time – it was too much for her.
On the other side of the fence, I knew someone who made a comment that he didn’t understand why people would take out any less than the maximum allowed (500 euros). Well, for one thing, that was more than my monthly paycheque, how is that for a reason?
Me, I’d never use ATMs unless I had to shop in a store with a minimum for debit (a lot of them have a 10, 15 or even 20 euros minimum for debit, in which case I pay with cash).
I disliked cash, that you can’t track, that you can lose, that people can steal from you.
I lived on cash for around 6 months using the envelope method, but I’m still relieved to go back to debit. And since here there usually isn’t a minimum for debit, I just don’t take out cash ever.
This being said, if I did, my balance would be fairly low, as my money is taken into my savings account automatically, and only the essential is left in the chequing account (same as others here)
Self righteous? Really, Robert? 🙂 I talked about the superiority felt by personal finance practitioners in my blog and you have proven my point. I feel the same way myself. Cheers :).
Like many of the comments here, I agree that many people these days transfer a bulk of their money to an interest-yielding account, rather than keeping it in the day-to-day account. To say that they are on the brink of bankruptcy and use the money for reckless spending is… well, a reckless generalisation.
You won’t like how much money I leave in the checking account at all time ($100-$200) but I have 2 years worth of living expenses for 2 people in my savings account. I would feel uneasy if I only have 4-figure fund left in my savings account.
In a nutshell, here is my current comfort level.
Living debt-free (besides a house note and maybe one car note).
Six months worth of an emergency fund.
Enough expendable cahs to do what I want. I know this last one is relative, but its my current goal
My main checking account currently has $8.43 and the linked Savings account has just under $1,800.00.
My other “savings” account has in excess of $15k spread between Money Market and CDs. This account is shrinking a bit as I’m using some of this money to pay down my Mortgage.
I don’t pay ATM fees nor would I put myself in that situation, but want to point out that the fee charged by the banks is there for a reason. It is a fee for the convenience of accessing your money at any time in a convenient location. Banks pay maintenance on those machines, and someone to service the thing at least once a day (I reasonably assume). The fee may be high, but the alternative is to have to go to your bank during busineess hours or not be able to access your money when you need/want it. Convenience comes at a oost.
First time poster here, after reading for many months. I’ve got accounts at 2 banks, and depending on which bank you’s see my ATM from, you’d get a different story. One of the first posts I read here about 6-8 months ago was concerning high interest checking accounts. After reading the article I promptly opened an checking account with NBRS with a 4.26% rate. THANKS!! It is not down the street from me, but I have business in which I pass by 3 branches a few times a month so it works great for me. I now keep every penny I can scrounge together there, and use my closer bank just occasionally.
If you found a discarded ATM receipt, (which you wouldn’t cause I’m a anti-litter freak, lol) I may have a $2 fee for using the ATM to get money from my NBRS bank. I get reimbursed for that fee, so I don;t sweat it, but I would have to be be desperate for cash to actually be charged for an ATM fee.
That said, from my personal experience with friends, I would say the majority of those discarded ATM receipts do represent people living day to day, and blindly paying fees.
As far as people changing there financial habits..it’s absolutley possible. I’m slowly working on helping a friend of mine. I found out he was deliberately paying close to $50 extra a month on late fees to his mortgage. I freaked on him, lol, and he basically told me they live month to month (on a decent salary) and that once he got behind he just settled into that routine. I convinced him to take some extra money he earns in a 2nd job, get paid up, then he will save close to $50 a month. He did that, and thanks me every month now that he is back on track. I can also see the financial wheels spinning, so I think he is starting to see the big picture. I’m hoping anyways!
As I scanned through the messages it seemed like most people keep far more of their (liquid) money in a savings account. I define liquid money as anything used for bills, short term savings and an emergency fund. I am assuming that people move money from one account into another in order to receive a higher ROR.
I’m curious, if a high interest checking account, I believe the one referred to had a 5.01% interest rate, offers a higher interest rate than a money market or a savings account, does it benefit someone to move money out of that account into another account that pays a lower interest rate?
I understand the psychology of keeping a separate savings account if it limits cash spending but is it really advantageous if you’re receiving a lower interest rate? Specifically, what is the advantage to keeping $200 in a checking account that pays 5.01% interest while keeping $10,000 in an ING account paying 1.3% interest?
I am new to this site and am trying to understand why (based on previous posts) so many people seem opposed to keeping “liquid” money in a checking account. If my goal is to maximize my ROR on “liquid” money it seems like I should put my money where it will receive the highest interest rate.
Regarding the transaction slips from the ATM. I always take the paper receipt as confirmation and/or proof of the transaction. I shred it at home later on.
I wouldn’t litter and I certainly wouldn’t give anyone the opportunity to have even a small glimpse into my finances by leaving my transaction slip behind.
You could make several assumptions with picking up these receipts. Granted, some of these people may be finacially disadvantaged and would live from payday to payday, however I don’t think that you would find shrewd money people keeping large sums of money in a standard savings account.
I always choose the ‘no receipt’ option, but if I did get a receipt it would look a bit like these, minus the fees (most ATMs in the UK don’t charge fees, at least not for my cards, and I wouldn’t use the ones that do unless I was totally desperate).
As others have said, I’m not sure that looking at people’s receipts really gives an accurate indication of their financial lives, although I do agree that littering could be associated with disorganised finances.
I agree with the idea of a financial thermostat – I keep a low minimum balance (about £100 – £200) in my main current account since most of my money is used for bills or savings, although this amount is lower than I’m really comfortable with. My business is still getting off the ground, so my income is pretty low right now, but as it increases, the balance I maintain will rise about 10x to match my real financial thermostat.
When I was younger and a student, I lived very close to the edge financially (permanently in my overdraft, no savings to speak of) and it didn’t really bother me. I changed my attitude after getting into credit card debt, and later having a ‘light bulb’ moment, and am definitely much more risk-averse these days.
@Paul #119
We currently have 3 savings accounts and 2 checking accounts. Both linked checking accounts have lower rates than their savings counterparts. Currently credit the local credit union savings is offering the highest interest rate, though not by much. If one of the checking accounts had a 5% interest I would definitely move the liquid assets to it. However, I’m done chasing 3-6 month promotions to increase interest for a little while. At some point the complexity just isn’t worth it.
Wow, such conclusions you’ve made by finding 7 receipts. I have a theory too. Since the bank is right next to Motley Fool Intergalactic Headquarters, the receipts are naturally from Motley Fool employees. The people you feel so sorry for are your colleagues.
Hello there,
I haven’t sifted through all of the other comments to see if this was already covered but I wanted to bring up a few points.
The first two assumptions made about other people’s habits seem like a pretty big jump to conclusion in my opinion.
Concerning the assumption about people having very small bank accounts (and the implication that their credit card debt is ‘much bigger’) – I personally only keep about $10 or so in my regular checking account. When I get paid every other week, I take out any bills that need to be paid as well as other forecasted, and somewhat irregular, expenses (groceries, gas, etc.) then I take everything that’s left and move it on over to ING for savings. With all the push of using online banks, I’m suprised the author didn’t consider this.
Now to the how-could-anyone-pay-so-much-money-to-get-to-their-money assumption. Since my regular bank (a state employee credit union in a state I no longer live in) has only a few branches they reimburse atm fees (up to $4 a month for my bank but I know this varies – some even cover all atm fees!). Since I know I’m getting that money back at the end of the month I have no problem paying $3 to get the $40 that I need to get something I really want (depending on if I have $40 in that account to begin with, see above).
Anyway, I’m not sure if this helps evolve the authors perception about other people’s habits but I hope so.
Thanks for listening,
Carly
Why is every anecdote on this site an excuse for self-righteous preaching?
Just because $700 is peanuts to you, that’s plenty to most people. For the millions of disabled and elderly Americans, that’s more than a month’s income/expenses (and if you’re on Medicaid you can’t have more than $2000 saved anyway, so you have to make sure to spend it). For any low-income person that might be a perfectly reasonable buffer to have in a checking account.
I balance my checkbook regularly so that at the end of the month I should only have about $500 in the account, even though it fluctuates up to about $6000 in the middle of the month.
If you actually want to educate people, stop guessing and judging and bring some actual facts and information to the table.
I keep more than $10 in my checking account. I am too lazy to move money all around just to get a measly 2% per year on it. If you keep an average balance of $2000 – that’s only 40 bucks a year, not really worth worrying about in my opinion. Of course the numbers would scale based on income and assets – but 2% is never going to make anyone rich, so unless you have a lot more time than money…
Unfortunately I can’t access my bank account as whenever I do the ATM simply erupts into flames and the city block loses power…probably has something to do with the ridiculously high amount of money that is in my account.
As for the article, careless people throw out their bank receipts and when you act a certain way in one scenario chances are you will act the same way in another scenario. There is a lot of extremely private information on a banking receipt and most people I know guard them viciously, clearly these thrower-out-ers simply don’t care.
Then again, if my huge sum could actually fit on to a piece of paper then I would make millions of copies and throw them all around the country just to show people how awesome I am. I’m cool like that.
Is my bank the only responsible one that doesn’t print much info on a receipt? They know they can blow in the wind or misprint so it has my name, last four digits of my account, and the transaction information. You’d get more personal info by googling me.
and Sarah @125, I think people are commenting more on the ~$50 balances than the $700 balance.
My Ther-Money-stat is set to about $20K for my checking account, because my credit cards are automatically linked to the bank account. It’s a convenience thing.
Reading through the comments though I have way too much money ($650K) sitting around in terrible interest bearing accounts, collecting nearly zero or less than 1%. Have another few hundred K in ING collecting a whopping 1.5% a year.
I guess for a spread of less than 1% I’m ok to let the money sit, so long as it doesn’t get lost by a bank failure…
Saving up to buy a nice house in cash but the way the gov’t is trying to prop up the housing market I may have to wait until 2012 to make a move…
-Mike
You couldn’t collect my ATM reciet because I haven’t used one since college (1979). I overdrew my account once and threw out the card!
If you did see my checking balance you would assume that I am not doing so well. I don’t leave more than monthly allowance in my checking and that gets withdrawn bi weekly.
BTW- I LOVE this type of article. It makes me think. Thanks for having him guest post!
I’m just glad to hear that I am not the only one picking up ATM receipts!
http://eliminatethemuda.com/2009/08/atm-fees-are-ridiculous/
Based on your findings though I think you must also take into account where you find the slips. If they are from a 7-11 in a poorer part of town you may see something very different than on the ATM slips outside of the Fool HQ!
For whatever its worth, I pay no heed to ATM fees whatsoever, and am willing to accept any and all because (a) my bank never charges me one, and (b) my bank refunds the fees changed unto me by other ATM owners.
Very interesting!
Although many financially savvy individuals do keep low balances in their checking accounts (like I do), I’m sure most of these financially savvy people are also like me and never use an ATM unless they take out a large enough chunk to make it more worthwhile ($300 or whatever the daily max would be).
Thus, these people trying to get a $20 bill out of the ATM probably don’t have any more money than what you see on the receipt. Very sad.
A bit off topic: I haven’t used an ATM in years. I put all my spending on rewards credit cards and pay them off each month. I pick up cash in person at a branch of my bank that is right next door to where I work. Ironic, eh? ATMs were originally touted as a way for banks to save money on tellers. I used ATMs exclusively for my banking from sometime in the 1980’s until about 2002. But the high ATM fees and the usual inability to reliably check my bank balances at an ATM now makes me avoid using ATMs. I hope banks never catch on and start charging fees to use the teller!
@Shara (#58)-
Some of these posts probably sound defensive because the article is self-righteous. Since when was this blog about judging people?
Addressing the littering issue, I’ve come to some conclusions; While walking along roadsides, the litter I see is largely fast-food wrappers. Seems to me that if someone disrespects their body enough to eat this stuff on a regular basis (I’m not completely bashing fast food, I eat it too, but on occasion), they probably won’t have much respect for their environment either. The earlier posting (#5) about people throwing garbage out their front door into the gutter outside their house made me think of that, seems a matter of lack of respect for self overall. Sad.
I didn’t read through all the comments, but I wanted to add my own fun fact. I once found a receipt in Wawa (a local gas station that has free withdrawls) with $351,592 as the balance.
Likely this person just sold a home, or was about to buy one, but I thought about the implications for awhile. What if they really did just keep that much money in their checking account? Crazy.
I just went to the ATM machine last night and a receipt was left there. The account had nearly $64,000 sitting in it. What are they thinking? Wells Fargo checking accounts earn next to nothing in interest.
Wow. Such smugness.
I know many of you commenting are obviously in great financial shape, but the tone on these posts is down-right depressing.
Personal circumstance: I don’t always have a lot of money left over at the end of each pay. I don’t have an emergency fund. I do have a credit card, which has about $1000 dollars owing on it and I’m working on dropping. I have a mortgage.
I also have a partner who can’t work (physical disability) and a daughter in private school (too smart for the public school system to cope with – definitely unexpected expense). I have a good stable job.
Does it bother me that I don’t have an emergency fund? Sure does. I know I am living with an element of risk. But I am doing the best I can in my circumstances and am reading blogs like this to see if I can do more to improve the rate I improve my families financial circumstances. We don’t want to downsize our house to fix the school fees problem because our house is built to suit my partner’s disability (not an easily found thing).
Don’t judge people by their bank balances – you want to help people with their financial health and knowledge? Great – start by being a bit more openminded.
(I know I am taking personally some of the comments, but I finding that improving my own financial lieracy apparently means my self esteem gets routinely beaten up..