4 Ways To Manage Your Money Without a Bank Account
Written by
Cindy Lamothe
Edited by
Gary Dudak
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If you find yourself without access to a bank account, don’t fret. Experts say it’s still possible to manage your money effectively.
“Financial exclusion is the term used to describe the situation where millions of people in the world do not have access to formal financial services,” explained Kevin Huffman, owner of Kriminil Trading. “For those without bank accounts, the objective of managing money can seem quite uneasy. Fortunately there are ways of handling money in a more safe and effective manner.”
Below are a few ways you can do this without a bank account.
Use Mobile Money Services or Digital Wallets
One approach, according to Huffman, is to make use of mobile money services. “Mobile money is a service that enables users to store, send and receive money through their mobile phones,” he said.
Numerous countries now have a well-developed mobile money system. “In turn, this service can be attractive for those without a bank account, as it provides them with an opportunity to have access to financial services.”
Mobile money services also usually incur lower fees compared with other traditional financial channels. In addition to payments, mobile money services deliver further benefits for users, such as paying bills and buying airtime.
Mark Damsgaard, founder of Global Residence Index, agreed. “Many mobile payment apps like PayPal, Cash App, and Venmo allow users to send, receive, and store money digitally.”
Some apps, he explained, even offer a card that lets you access your funds at ATMs. “Digital wallets like Google Pay or Apple Pay allow you to store money electronically and make payments directly from your phone.”
He said this option works well for everyday purchases and can be a safer way to carry money compared to cash. “While these apps are convenient, be cautious about fees for instant transfers or ATM withdrawals, and make sure to use trusted platforms to protect your money.”
Also, be mindful of where and when you use your digital wallet, especially in areas with weak internet connections or businesses that don’t accept digital payments.
Use Community-Based Institutions
Another way, Huffman noted, would be to use community-based financial institutions, which offer financial services to the unbanked. Such institutions might offer savings accounts and small loans to unbanked individuals at lower interest rates than those offered by traditional banking institutions.
“As an example, both the Asian Development Bank and the World Bank have created initiatives that help and support these institutions in many regions.”
That said, Huffman observed that these informal money-management systems can be very dangerous. “Never lend money to friends or family on an informal basis, without having proper documentation and without charging interest.”
Use Prepaid Debit Cards
Prepaid debit cards allow you to load money onto the card and use it like a regular debit card for purchases, bill payments or even ATM withdrawals. “They don’t require a bank account, so they’re a good alternative if you don’t have access to traditional banking,” said Damsgaard.
He recommended choosing a prepaid card with low fees and making sure it’s accepted widely for both in-store and online purchases.
Get a Fireproof Safe
Keeping your money safe should be your first priority when you don’t have a bank account to secure your finances, said Melanie Musson, finance expert with Insurance Providers. “So, you’ll want to get a fireproof safe in your home.”
She added, “You can cash your paycheck or income and keep it in your safe. You’ll need to create a budget so you can allocate how you’re going to use your money.”
She noted that the envelope system, where you put your money for different purposes in different envelopes, can work well for those using only cash. “For example, you’ll decide how much you can spend on groceries before your next paycheck and put that amount of money in an envelope labeled ‘groceries.'”
She continued, You can use a cashier’s check to pay for your mortgage or rent. If you’re renting, you may even be able to pay with cash. Just make sure you get a receipt so the property owner can’t try to say you didn’t pay.”
To save and prepare for retirement, Musson advised opening investment accounts and contributing to them monthly. “These accounts provide a place for your money to earn interest and be held securely without a high risk of theft.”
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