Every young person should know how to handle money. Most experts emphasise that learning it from an early age is necessary! The basis is to familiarise yourself with the concepts the banking and finance world brings. You can find an explanation of many of them on this page.
An overview of one’s income and expenses is critical in adequately handling money. The National Bank of the Slovak Republic has launched the 5peňazí program, which, among other things, will provide you with several valuable tips on how to manage your finances properly. You can also find a similar article on the website of Tatra Banka.
Nowadays, it is almost necessary to have a bank account. There are two main types of bank accounts, namely legislative and commercial. Their terms, benefits and purpose vary. Legislative accounts are described in detail in the article Legislative accounts. About commercial accounts, you can read the article Commercial accounts.
The average young person usually chooses mainly from the following types:
- student account
- current account
- saving account
- possibly a business account
You can read more about them in the article Great overview of types of bank accounts of Slovak banks.
Think carefully about which account is the most suitable for you. Each bank has its own rules and account packages, so it is ideal for studying the offers of different banks and choosing the account that suits you best.
The advantage of being the owner of a bank account at a young age is that most banks in Slovakia provide so-called youngsters or student accounts for which you do not have to pay any monthly fees. You will learn how to handle your funds without the need to finance your account. Banks usually provide these services until the end of university studies or until reaching the age of 25 or 26.
Another benefit is that you get to know and learn to work with the functions that current accounts provide at a young age. Banks usually have mobile applications and internet banking, through which you can easily handle the money in the account. The individual functions of these tools differ depending on the banks.
On the following link, you will find a list of banks you can choose from in Slovakia. You will also find other important information and interesting articles on this website.
Dealing with finances online can sound dangerous. But the truth is that banks are aware of the various dangers of the online world and therefore use complex security systems to protect every account. These are multiple codes such as PIN or PID, signatures and other identity verifiers. You can learn more about them, for example, in the video above.
The conditions for obtaining a bank account for a foreigner may differ depending on the specific bank. Banks in Slovakia generally allow their clients to communicate in English, especially the largest ones, such as Tatra Banka or VÚB Banka. Do not hesitate to contact them and ask about their offer. Arrange a meeting with an English-speaking bank employee and discuss your possibilities.
You will also receive a payment card with your current account. There are two types of payment cards – debit and credit. In short, the debit payment card is used to draw your own funds or funds from an authorised overdraft. A credit card uses funds provided by the bank – basically, in this way, the bank offers you a loan in a certain pre-approved amount every month.
On the following page, you will learn more about the differences between these payment cards.
Deciding on the right bank can be difficult. Therefore, do not be afraid to ask and inform on the banks’ websites, but also in person. Don’t forget that banks are not your enemies. They want to win and keep you as a customer, so opening personal communication with the bank is important.
One of the most important parts of financial literacy is tracking money, managing expenses and creating a budget and financial goals.
Simply put, it is an overview of your current financial situation. It helps you identify bad habits, i.e. what you spend money on unnecessarily. All you need is to know your income and expenses for the last period, and you can analyse whether you spend more than you earn, stay at zero, or even save something.
Many people still keep track of their finances with a simple spreadsheet, but there are also several apps where you simply enter your incoming and outgoing money, and the app helps you store and track that information. One such application is, for example, Mint, which is available to you completely free of charge. However, we also offer you a list of the best apps for tracking expenses in 2022.
Break down your expenses into categories: rent, utility bills, travelling, groceries, dining out, entertainment, and so on. Then you will see how much you spend on each category. For example, our worksheet can help you record your expenses.
Creating a budget
Do you know the 50-30-20 rule? This rule means that:
- You can spend 50% of your income on basic things, such as rent, utility bills, food,
- 30% can go to items that are not necessary but bring you joy, i.e. eating in restaurants, entertainment or clothes,
- And 20% you set aside for savings, building emergency funds and retirement.
Is it hard for you to follow this rule? We have some tips for you! Budget your non-essential expenses. Once you know how much you can spend on non-essential things per month, it would be easy to budget them so that they meet the 30% criterion. Each month, plan how much you can spend on food, clothing and entertainment. In this way, it will be more difficult for you to spend money. Also, search Phantom costs. These are expenses that we don’t even notice we have. For example, some bank accounts charge monthly fees or insurance. You may also have previously subscribed to a streaming platform you no longer use.
The National Bank of the Slovak Republic launched a program to improve financial literacy 5peňazí. Their articles will help you find answers to some of your questions. If you want to learn more about the topic, we recommend listening to ordinary conversations about money, which you can find under the MONEY TALKS podcast.
Don’t forget to listen to our podcast with finance expert Ivana Mikitová.
Listen on your favourite podcast platform: