This release is all about the money, money, money. A very critical and emotional aspect of our lives. Buckle up! 💸💸

I had just finished from Uni when I had a financial rude awakening — why am I getting punished for leaving my money in the bank? Why is every system designed to take my money? What would I have left to keep? 🥹

This awakening happened as I transitioned from being a full-time student to a young adult figuring out the in-between phases before officially entering “the workforce”. As you can imagine, everything started expiring:

In the twinkle of an eye, my student benefits disappeared and I had to pay full-price for everything — I was petrified! The final panic happened when I received an email from my bank alerting me that my “student status” is expiring and therefore, my chequings account would no longer be a student account.

Translation → they planned to start charging me monthly fees for keeping my money with them except I have a crazy $$$ amount sitting in that account to avoid incurring these fees.

I couldn’t take it anymore. All I could think of was that I had no income coming in and the little money I had left was about to be taken away. Not spent by me, but taken away in the form of fees.

For a split second, I thought to start a Masters degree immediately just to defer the consequences of becoming part of the “adults” in society.

That thought was immediately interrupted with a HELL NO!

So I began researching other financial solutions to preserve the little cash I had left and this was how my financial literacy journey began.

A chequings account is designed for everyday use. Bills, payments, and other financial obligations flow through this account i.e. large sums are not meant to sit in here. The bank knows, the people know.

With this in mind, how is a product that was designed for a specific purpose now used as a ploy to take more from the inattentive average person?

Have you heard of the “Minimum Chequings Balance”? I’ll tell you all about it.

In a nutshell and with the exemption of students, a person who opens a chequings account with a bank (in Canada) is required to have anywhere from $3000 - $6000 as a daily account balance to avoid incurring monthly fees. The actual value depends on the bank and accounts they offer.

Let’s do the math.

This implies that for a person to use the chequings account for the purpose of which it was designed i.e. daily living, without incurring any fees, they would have to have an amount greater than $3000 at any given moment sitting in that account.

Do you know what the bank does when you have a good amount of funds sitting in an account? They lend it out through loans and charge interest and/or they invest and get returns using your money.

What do you get in all of this? $0. If your daily balance falls below the minimum chequings amount even for a day out of the month, you are charged fees.

The critical question here is, why is the concept of a “fee” associated with a chequings account? Why do you put money in the bank and that same bank can do whatever they like with your money, including charging you a fee for taking it out.

I personally find this all ridiculous and puzzling.

The savings account is designed to hold money. We know that and the bank expects that. Hence why the notion of a chequings account exists for day-to-day expenses 🙄.

Have you ever been in a pickle and either had to move funds from your savings or use the funds directly from that account?

Any movement through, within, or from this account qualifies as a “transaction”.

Depending on your bank and their fee structure, every transaction from a savings account results in fees (they are quick with it too).

This is a system where the banks are legally required to keep only 10% of your funds as reserve i.e. available cash that can be withdrawn.

Example, you deposit $1000 at the bank, they keep $100 as cash and use $900 to “stimulate the economy” i.e. lend, invest, and so on. This is possible because almost everyone keeps their money at the bank contributing to its overall reserve.

If everyone was to need cash at the same time and went to the bank to withdraw cash simultaneously, the bank would not have enough cash to go around.

A prime example of this playing out was Silicon Valley Bank (SVB) in 2023. The bank had investments that weren’t doing so well and at the same time, customers continued to withdraw their money from the bank.

Naturally, news spread and the bank was in a risky spot. More customers panicked and wanted to withdraw their funds from the bank which resulted in an estimated $42 billion withdrawal requests in a single day.

SVB could not give their customers their money back because they didn’t have the cash to give. The FDIC had to shutdown the bank and step in. Read more on SVB from Standford’s Research here.

In the past, the bank rewarded its customers for choosing them as the place to keep their money. That reward was in the form of a tangible interest.

On a monthly or annual basis, the amount of money kept in a savings account is used to calculate the interest/reward that the bank gives to its customer.

It’s their way of saying, you trust us and here is a token of our appreciation. It’s a win-win. You keep your money in the bank, they use it to make more money, and you get a percentage and see your money grow modestly.

As of today, that interest in Canada sits at 0.05%. It’s hilarious.

👆🏽 All of the above revealed that with traditional banking solutions and systems, you are perpetually either loosing actual money or loosing the purchasing power of your money.

My solution to avoid traditional banks? Financial Technology Companies 🙏🏽.

The takeaway from my story and findings above is that you should take control of your finances. The economic systems are designed to continuously take and if you’re not proactively preserving what you have and what you bring in, it’ll all slip away.

You don’t have to experience a rude awakening like I did, you could start with awareness and steadily progress through literacy to different financial stages of life.

We live in a society where money is the medium of exchange for value. For those of us in capitalist economic structures, where money is the operating system, how do you expect to live (well) and function in that system without a good understanding of your personal finances?

It’s like playing a game with no idea of what the rules are, what the players can do, and how best to win — you were setup for failure before the game even began.

News flash: Your money keeps you in the system but financial literacy is how you effectively thrive in that structure. It’s essential.

After becoming aware of how the financial systems were designed, I made the conscious choice to pay close attention to my finances and take control of what I could.

That was all it took. The fear of running out of money before I was able to stand on my feet again after Uni propelled me into taking action.

You don’t have to be at the brink of financial insecurity to start taking your finances seriously. In the next release, I’ll walk you through the different financial stages and how they manifest in life. With this information, you understand better where you are and the actions you can take to be in a better financial place and not compromise your well-being.

Stay Audacious,
Chikodilee 🤎🤎