7 ways you can beat the banks and live frugally

By Kathryn Hawkins

When you sign up with a bank, you may think you're protecting your money--but in many cases, financial institutions implement fees and other charges that can chip away at your hard-earned savings.

Here are 7 ways to beat the banks and manage your financial life to save as much as possible:

1. Plan a budget based on your monthly income. Take note of how much you bring in each month and your various expenses, such as rent or mortgage, food, car payments, and entertainment. Then set up a chart to determine the maximum amount that you should spend on each expense category based on how much you make.
   
   If you find yourself going into overdraft or relying on credit cards to make payments, modify your spending habits so that you can live within your budget, whether that means getting a roommate or brown-bagging your lunch a few days a week.


2. Pay yourself first. Automatically transfer money from your checking to your savings account immediately after you deposit your paycheck. If you have extra cash, don't just let it sit there in your checking account--move it to a savings account, where it can accrue interest. Many savings accounts will gain over 1 percent per year--so if you have a balance of $5,000, you could make an extra $50 a year just for moving your money into one of the best high-yield savings accounts.


3. Sign up for minimum balance alerts. Many banks offer free services unless your account balance goes below a certain limit--in many cases, around $2,500--after which you'll be charged a monthly maintenance fee. Set up an automated alert to ensure that your account never goes below the minimum daily balance so that you won't be subject to these additional charges.
   
   
4. Opt out of overdraft protection. Many consumers are confused about their options when it comes to overdraft protections. Often, they assume that they'll be charged a fee even if their debit card is declined while attempting to make a purchase, so it's in their interest to protect against this possibility. But in fact, you'd pay nothing in such a situation--versus paying an average overdraft-protection fee of $35.
   
   Other options are available too: The median fee to automatically transfer funds from a savings account to cover the overdraft is just $10, and often you can transfer funds from lines of credit to your checking account for less as well.
   
   
5. Set up online bill payments selectively. Many banks offer their consumers the option of automatic payment for all charges. While it can be tempting to not have to even look at your bills, this option could get you into trouble if you're paying for charges that you later need to dispute. To keep control of your finances, set up this option only for fixed-cost recurring payments like Internet, phone and utilities bills.
   
   
6. Schedule a monthly "finance hour." This is time you can use to go over your bills and financial statements and reconcile them with your bank account. You can also use this time to make sure your money is working for you, by searching for the best rates on savings accounts and the best money market accounts at least once every quarter. It's important to stay on top of all of your debts and assets, and checking in monthly will help you make sure that you never fall behind.
   
   
7. Stay in network. If you need cash, your bank will likely charge hefty surcharge fees when you make withdrawals from other banks' ATMs--the average withdrawal fee is now $2.22. These fees can really add up, especially if you're only withdrawing small amounts of cash. If you do need to use an ATM that's not connected with your bank, make the maximum withdrawal and keep the cash you don't need on hand in a safe.
   
   If you open an account with an online savings bank, you can generally make free withdrawals from any ATM, so you might consider switching to an online bank if you spend a lot on ATM surcharge fees. Here are some of the best online savings accounts to get you started.