Managing Money

This page discusses the steps Indian trust beneficiaries can take to manage and save money. Covered topics include: 

Open a Bank Account

An FDIC-insured bank account protects your money from loss due to natural disasters, financial market failures, and fraud. A bank account helps you get paid faster through direct deposit and saves you money since you won’t have to pay check-cashing fees. A bank account also provides proof of payment and helps track spending so you can create a budget.

Banks offer accounts with different features, costs, and requirements. We recommend choosing a bank that’s FDIC-insured, which means the money in the account is guaranteed by the U.S. Government up to $250,000. You should also pay attention to monthly fees, minimum balances, overdraft fees (charged when you spend more money than is in your account), and fees to withdraw cash from ATMs.

Visit the Consumer Financial Protection Bureau to learn more about bank accounts and services.

PROTIP: Using direct deposit for your IIM payments means you get paid faster and won’t suffer delays due to lost or stolen checks.

Create a Budget

A budget is a written plan that tracks how you spend money. Living within a budget helps you plan, save, and control your expenses. Spending less than you earn means you can save money, avoid debt, improve your credit, and achieve financial goals like purchasing a new car.

Visit consumer.gov to learn more about making a budget.

Create an Emergency Fund

An emergency fund is money you set aside for unplanned expenses or financial emergencies like car repairs, home repairs, medical bills, or a loss of income. If you don’t have an emergency fund, sudden expenses can lead to debt that affects your ability to save money. 

Visit the Consumer Financial Protection Bureau to learn how to build an emergency fund.

PROTIP: Some banks offer services like recurring transfers that can make automatic contributions to an emergency fund.

Eliminate High Interest Debt

If you owe money on a credit card, pay off the balance in full as quickly as possible. Credit cards charge 18% interest or more if you carry a balance from month to month. It’s difficult to save money while paying off this kind of debt. A savings account in a bank may earn less than 1% interest, while your IIM Account may earn more. Virtually no investment can provide consistent returns that match the 18% interest rate charged by credit cards.

Payday loans are even more costly and should be avoided. These short-term loans charge fixed fees of $10 to $30 for every $100 borrowed. Compared to credit cards, a two-week payday loan with a $15 per $100 fee equates to an annual percentage rate of almost 400%.

PROTIP: If you have multiple high interest loans, pay off the one that charges the highest interest rate first.

Monitor Your Credit Score

Your credit score is a number that rates your credit risk. Banks and other financial institutions use your score to decide whether to give you credit. Your score can also affect the terms they offer and the interest rate you pay. Having a high credit score can make it easier for you to borrow money to buy a car or a house.

You can get a free annual credit report at AnnualCreditReport.com. Credit reports list your bill payment history, loans, current debt, and other financial information. They also show where you work and live and whether you've been sued, arrested, or filed for bankruptcy. If you find errors, you should dispute them and get them corrected.

PROTIP: consumer.gov offers even more advice for managing money, managing debt, and avoiding scams.

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