How Organizing Your Bank Accounts Can Give You Financial Superpowers

Banking is an essential part of our everyday lives. Whether we are paying bills, saving for a rainy day, or investing for the future, we rely on our bank accounts to manage our money. But how many of us are actually organizing our bank accounts in a way that maximizes our financial potential?

In this article, we will explore the benefits of organizing your bank accounts, the challenges of doing so, and how a tool like Kubera can help you achieve your financial goals. We will also look at the current trends and statistics of the banking landscape in the United States, and how the transition to digital banking is changing the way we interact with our money.

A Snapshot of America’s Banking Landscape

Banking, a widespread and common practice in the United States, has seen significant changes with the advent of digital banking, which includes online and mobile banking. According to a survey by Statista, 94 percent of adult Americans had a bank account in 2022, up from 92 percent in 2019. This indicates that bank account ownership has permeated society and become a norm for most people.

The Federal Reserve also reports that the share of banked households in the United States has increased steadily from 93 percent in 2015 to 95 percent in 2022. This means that more Americans have access to basic financial services, such as checking and savings accounts, than ever before.

However, not all banked households are equally served by their financial institutions. The Federal Reserve classifies banked households into three categories: fully banked, underbanked, and unbanked. Fully banked households have a bank account and do not use alternative financial services, such as payday loans, check cashing, or money orders. Underbanked households have a bank account but also use alternative financial services. Unbanked households do not have a bank account at all.

In 2022, 81 percent of banked households were fully banked, 13 percent were underbanked, and 6 percent were unbanked. The share of fully banked households rose by 10 percentage points since 2015, while the share of underbanked and unbanked households declined by 4 and 6 percentage points, respectively. This suggests that more Americans are relying on their bank accounts as their primary source of financial transactions, and less on alternative and often costly services.

The Transition to Digital: The Ascendance of Mobile and Online Banking

Digital banking trends have significantly influenced the banking landscape, characterized by a rapid adoption of technologies like mobile and online banking. These technologies allow customers to access their bank accounts anytime, anywhere, and perform various tasks, such as checking balances, transferring money, paying bills, and depositing checks, without visiting a physical branch.

The popularity of mobile banking, in particular, has skyrocketed in recent years. The share of banked households using mobile banking as their primary access method increased nearly fivefold from 9 percent in 2015 to 43.5 percent in 2021, according to Statista. This means that almost half of the banked households in the United States prefer to use their smartphones or tablets to access their bank accounts, rather than their computers or ATMs. As of 2022, 78% of adults in the U.S. prefer to bank via a mobile app or website. Only 29% of Americans prefer to bank in person.

The number of digital banking users in the United States is also expected to grow significantly in the next few years. Statista projects that the number of digital banking users will reach almost 217 million by 2025, up from 195 million in 2021. This represents an increase of 11 percent in four years, and a penetration rate of 62 percent of the total population.

The transition to digital banking has several implications for both customers and banks. For customers, digital banking offers convenience, speed, and security, as well as access to a variety of features and services that may not be available at physical branches. For banks, digital banking reduces operational costs, increases customer loyalty, and enables innovation and differentiation in a competitive market.

The Crucial Task of Organizing Bank Accounts

While digital banking offers ease of access, it also presents the challenge of effectively organizing multiple accounts. This is crucial for efficient financial planning, ensuring that account balances across different banks and account types are accurately tracked and managed. Most Americans don’t have a single bank account. They have many different accounts for different purposes, such as:

• Multiple savings accounts for different goals, such as emergency funds, vacations, or down payments
• Checking accounts for everyday spending and bill payments
• Spending accounts for discretionary expenses, such as dining out, entertainment, or shopping
• Retirement accounts for long-term savings, such as 401(k)s, IRAs, or Roth IRAs
• Short-term savings accounts for unexpected or irregular expenses, such as car repairs, medical bills, or taxes

In addition, many Americans have separate accounts at multiple different banks and credit unions, for various reasons, such as:

• Taking advantage of different interest rates, fees, or rewards
• Diversifying their financial assets and reducing risk
• Having access to different products and services, such as loans, credit cards, or insurance
• Having backup options in case of emergencies or technical issues
• Keeping their money separate from their spouse, partner, or family members

While having multiple bank accounts can be beneficial, it can also make personal finance management more difficult and complicated. Some of the challenges of having multiple bank accounts include:

• Difficulty managing cash flow and budgeting, as money moves in and out of different accounts
• Difficulty meeting savings goals and tracking progress, as money is scattered across different accounts
• Difficulty handling variable expenses and income, as money needs to be transferred between different accounts
• Difficulty achieving other financial goals, such as paying off debt, investing, or donating, as money is not allocated efficiently
• Difficulty maintaining security and privacy, as more accounts mean more passwords, PINs, and personal information to protect

Driving Personal Finance Efficiency Through Bank Account Organization

To overcome these challenges and optimize your personal finance, it is important to organize your bank accounts in a way that suits your needs and goals. Organizing your bank accounts can have several benefits, such as:

• Saving money by avoiding fees, penalties, or overdrafts, and earning more interest or rewards
• Improving your credit score by paying your bills on time, reducing your debt, and increasing your credit utilization ratio
• Aiding in the down payment process by having a dedicated account for saving and showing proof of funds
• Handling monthly bills more easily by having a separate account for fixed expenses and setting up automatic payments
• Managing subscriptions better by having a separate account for recurring charges and canceling unwanted services

There is no one-size-fits-all solution for organizing your bank accounts, as different people have different preferences and situations. However, here are some general tips and best practices to consider:

• Have at least one checking account and one savings account: A checking account is essential for everyday transactions, such as paying bills, receiving income, or withdrawing cash. A savings account is essential for building an emergency fund, which should cover at least three to six months of living expenses. Having a separate savings account can also help you avoid the temptation to spend your savings and earn more interest.
• Have separate accounts for different savings goals: Having separate accounts for different savings goals can help you stay focused, motivated, and accountable. For example, you can have a separate account for saving for a vacation, a car, or a house. You can also have a separate account for short-term savings, such as taxes, insurance, or gifts. To make saving easier, you can set up automatic transfers from your checking account to your savings accounts every month or every paycheck.
• Have separate accounts for different spending categories: Having separate accounts for different spending categories can help you control your spending and stick to your budget. For example, you can have a separate account for discretionary spending, such as dining out, entertainment, or shopping. You can also have a separate account for variable expenses, such as groceries, gas, or utilities. To make spending easier, you can use different debit cards or mobile wallets for different accounts, and set up alerts or notifications to track your spending.
• Have separate accounts for different income sources: Having separate accounts for different income sources can help you manage your cash flow and plan your finances. For example, if you have multiple streams of income, such as a salary, a side hustle, or a rental property, you can have separate accounts for each income source. This can help you track your income, allocate your money, and pay your taxes. You can also have a separate account for irregular income, such as bonuses, commissions, or dividends, and use it to boost your savings or investments.
• Have separate accounts for different financial institutions: Having separate accounts for different financial institutions can help you diversify your financial assets and take advantage of different offers and services. For example, you can have a checking account at a traditional bank, a savings account at a high-yield online bank, a retirement account at a brokerage firm, and a credit card at a credit union. This can help you access different interest rates, fees, rewards, products, and services, and reduce your risk and exposure.

Setting Financial Goals and Building Wealth with Organized Banking

Organizing your bank accounts is not only a matter of convenience and efficiency, but also a matter of strategy and vision. By organizing your bank accounts, you can align your money with your financial goals and build your wealth over time.

Having separate accounts for different savings goals is a key part of effective money management, as it allows you to prioritize your needs and wants, and allocate your money accordingly. For example, you can have separate accounts for:

• Emergency funds, which are essential for covering unexpected or urgent expenses, such as medical bills, car repairs, or job loss. Experts recommend having at least three to six months of living expenses in your emergency fund, and keeping it in a separate, high-yield, and liquid account.
• Down payment, which is a large sum of money that you pay upfront when buying a home. The amount of down payment you need depends on the price of the home, the type of mortgage, and your credit score. Generally, the higher the down payment, the lower the interest rate and the monthly payment. Saving for a down payment can take years, so having a separate account can help you stay on track and show proof of funds to lenders.
• High-yield savings accounts, which are online savings accounts that offer higher interest rates than traditional savings accounts. High-yield savings accounts are ideal for saving for medium-term goals, such as vacations, weddings, or cars, as they allow you to earn more interest and grow your money faster. High-yield savings accounts are also FDIC-insured, meaning your money is safe and protected up to $250,000 per account.
• Retirement accounts, which are accounts that help you save and invest for your retirement. There are different types of retirement accounts, such as 401(k)s, IRAs, or Roth IRAs, each with their own rules, benefits, and tax implications. Retirement accounts are essential for building your wealth and securing your financial future, as they allow you to take advantage of compound interest, tax breaks, and employer matches.
• Sinking funds, which are accounts that help you save for specific and predictable expenses, such as taxes, insurance, or gifts. Sinking funds are different from emergency funds, as they are meant for planned and expected costs, not unexpected or urgent ones. Sinking funds can help you avoid debt, stress, and overspending, as they allow you to set aside money every month and pay for these expenses in cash.

Managing these goals with multiple accounts can be challenging, especially if you have accounts at different financial institutions. You may have trouble keeping track of your balances, transactions, and progress, and miss out on opportunities to optimize your money. That’s why you need a tool like Kubera, which can help you manage your bank accounts and more in one place.

Organize Your Bank Accounts (And More) with Kubera

Kubera is a personal finance app that helps you organize your bank accounts, track your investments, store your documents, and plan your legacy and financial future with ease. With Kubera, you can:

• Sync multiple bank accounts and track all of your investments in one place: Kubera automatically connects to your bank accounts and investment accounts, and updates your balances and transactions in real time. You can see your net worth, cash flow, and portfolio performance at a glance, and compare them with your goals and benchmarks. Kubera offers the most reliable connectivity to Banks, Brokerages and nearly any Investment Account from the widest coverage of over 20,000 institutions around the world. Here's the list.
• Store secure documents, digital assets, and more: Kubera allows you to store and access your important documents, such as wills, trusts, deeds, contracts, or receipts, in a secure and encrypted vault. You can also store your digital assets, such as cryptocurrencies, domain names, NFTs as well as add notes and documents for any asset, and share them with your trusted contacts or beneficiaries.
• Plan your legacy and protect your loved ones: Kubera helps you plan your legacy and ensure that your assets and wishes are passed on to your loved ones in case of your death or incapacity. You can designate your beneficiaries, assign your assets, and specify your instructions for each of them. You can also set up a dead man’s switch, which is a feature that monitors your activity and sends alerts to your beneficiaries if you are inactive for a certain period of time. You can also choose a trusted angel, who is a person who can access your vault and assist your beneficiaries in case of an emergency.
• Enhance Financial Planning with Fast Forward Feature: Kubera's "Fast Forward" feature offers a unique approach to financial planning. It enables users to simulate future financial scenarios based on their current assets, investments, and savings. By inputting different growth rates, inflation rates, and time horizons, users can visualize how their net worth might evolve over time. This feature assists in making more informed financial decisions, setting realistic savings goals, and adapting investment strategies to future expectations.

Kubera is the ultimate personal finance app that helps you organize your bank accounts and more. Whether you want to save, invest, or plan for the future, Kubera can help you achieve your financial goals and build your wealth. Sign up for a trial of Kubera today and see for yourself how organizing your bank accounts can give you financial superpowers.