How to Manage Finances Without a Checking Account

Paying cash for incidentals can save you some fees.
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Whether you don't want a checking account or can't get a checking account because of a bad credit history, managing your finances without one has its share of challenges. The main issue is the cost; no matter how you decide to cash your paycheck and pay your bills, there are often fees associated with living without a bank account. But with proper planning, you still can get your bills paid and track your spending.

Step 1

Cash your paycheck at a low-cost check-cashing center. Many states cap the amount check cashers can charge you, but it's usually between 1 and 5 percent of the amount of your check. These fees can add up quickly, so take the time to research check-cashing centers near you. Some discount stores cash your checks for a flat fee, which can often save you money.

Step 2

Develop an envelope system to manage your cash. Create a budget that includes all your monthly expenses as well as extra money for emergencies, then separate the money into envelopes. Take the grocery envelope to buy food or the gas envelope when you fill up your car. This helps keep you from overspending and on budget. If you want to pay your bills in cash, separate the different bills into envelopes as well, and drive to the billers' offices to pay. Bring your bill stubs to make sure the money is credited to the correct account, and always get a receipt to prove how much you paid and when.

Step 3

Apply for a savings account. If you want a checking account but don't qualify because of past credit issues, you still may qualify for a savings account. This can help rebuild your credit and credibility with the bank or credit union while giving you a safe place to store your emergency fund. The bank or credit union may not approve you for an ATM card that's linked to your savings account, but you'll be able to withdraw funds inside the bank when necessary. There is usually a limit, such as three times a month, that you can withdraw funds.

Step 4

Pay bills with money orders. You can find money orders at many locations, including the post office, drug stores, discount stores and convenience stores. The fee for each money order varies by location, so research your cheapest nearby option. Take a list of the bills and amounts with you to reduce the number of trips you need to make. Keep a copy of the money order, then mail the money orders with the bill stubs. Getting money orders helps keep you from driving to the different billers' offices each month.

Step 5

Buy a prepaid credit card. These cards allow you to reload with cash at local discount stores, drug stores and convenience stores, and they work like a debit card, allowing you to spend up to the amount of cash you put on the card. Some allow you to set up direct deposit, where your paycheck goes to the card automatically, saving you the costs of cashing your paycheck. Read the details before choosing the right card for you. Most have an up-front, one-time fee, so find the lowest one. Look for a list of additional fees, such as a fee for withdrawing cash from an ATM, a fee per purchase or a monthly service fee. There are always fees with prepaid credit cards, but if you find one that's affordable for you, these cards give you the freedom to pay bills online, shop online, reserve hotel rooms or buy airplane tickets.

Step 6

Keep your receipts for tax purposes. Since you don't have a monthly statement of your expenditures without a checking account, create a simple but effective filing system to keep your receipts in order. Ask your accountant what receipts you need to keep. You likely can't write off grocery purchases, but you may be able to write off items such as office supply purchases and gas for your car, especially if you are self-employed or if travel is required for your job. Uniform purchases are often considered a deduction, as is child care. Without a checking account to prove the amounts you spend on deductible items, make sure you keep your receipts filed promptly.

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