Banking

Your bank accounts are the plumbing of your financial life. Get the structure right and money flows automatically. Get it wrong and you leak fees, miss opportunities, and waste time.

Account Types

Checking Accounts

Your daily operations account. Money in, money out.

What to look for:

• No monthly fees (or easily waivable)
• No minimum balance requirement
• Free ATM access (or ATM fee reimbursement)
• Good mobile app
• Free checks or no check fees

Savings Accounts

Where your money earns interest while staying accessible.

Traditional Savings (Big Banks)

High-Yield Savings Accounts (HYSAs)

This is where your emergency fund and short-term savings live. There is no reason to keep savings in a big bank 0.01% account when you can get 4-5% online.

Example impact:

You're leaving hundreds (or thousands) on the table using a traditional savings account.

Certificates of Deposit (CDs)

Lock your money for a fixed period at a guaranteed rate.

When CDs make sense:

• You have a specific goal 6-24 months away (house down payment, tuition)
• You want to lock in a rate when rates are expected to drop
• You won't need the money before maturity

When CDs don't make sense:

• Emergency fund (need immediate access)
• HYSA rate is comparable (why lock up money?)
• You might need the money early (penalties eat the benefit)

CD Ladder Strategy

Spread money across multiple maturity dates for flexibility and rate optimization:

When CD 1 matures, reinvest for 60 months. Now every 12 months, a CD matures, giving you access while earning longer-term rates.

Money Market Accounts

A hybrid between checking and savings.

Useful for: Parking large sums (down payment savings) with check-writing ability. Otherwise, a HYSA is usually simpler.

Treasury Bills (T-Bills)

Not a bank account, but worth knowing as an alternative for savings:

Best for: High-tax-state residents with large savings balances.

Choosing a Bank

Online Banks vs. Traditional Banks

Recommendation: Use both. Online bank for savings (high interest), traditional bank or credit union for checking (cash access, branch if needed).

Credit Unions vs. Banks

Credit unions are often excellent for checking accounts, auto loans, and mortgages.

What to Avoid

• Monthly maintenance fees (unless easily waived by direct deposit)
• Minimum balance requirements you can't comfortably meet
• ATM fees without reimbursement
• Overdraft fees ($35 per occurrence at many banks)
• Wire transfer fees (some banks charge $25-35)
• Paper statement fees

Fee Avoidance

Common Bank Fees

Overdraft Protection

Opt out of overdraft "protection." It's not protection. It's a $35 loan.

Best approach: Opt out, link to savings as backup, maintain a buffer.

Account Organization

The Multi-Account System

Use separate accounts for separate purposes. This makes budgeting automatic.

Basic setup:

Advanced setup:

Many online banks (like Ally) let you create multiple savings "buckets" within one account, which simplifies this.

Automation Flow

Paycheck deposited (Hub Checking)
    │
    ├──→ Auto-transfer: Emergency Fund (HYSA), Day 1 after payday
    ├──→ Auto-transfer: Sinking Funds (HYSA), Day 1 after payday
    ├──→ Auto-transfer: Spending Account, Day 1 after payday
    ├──→ Auto-pay: Rent/Mortgage, Due date
    ├──→ Auto-pay: Utilities, Due date
    ├──→ Auto-pay: Insurance, Due date
    ├──→ Auto-pay: Subscriptions, Due date
    └──→ Auto-invest: Brokerage, Day 2 after payday

Set it up once. Review monthly. Adjust quarterly.

Automating Your Finances

The System

1. Direct deposit → hub checking account
2. Day 1 after payday: Automatic transfers to savings, investments
3. Bills on auto-pay: All fixed bills charged to credit card or checking
4. Credit card on auto-pay: Full balance paid monthly from checking
5. Weekly transfer to spending account

What to Automate

What NOT to Automate (Without Monitoring)

• Variable bills that could spike (medical, utility in extreme weather)
• Payments to vendors who make errors
• Any auto-renewal you haven't explicitly approved

Rule: Automate everything, but review statements monthly. Automation without oversight is how unauthorized charges go unnoticed.

Bank Safety

FDIC Insurance

The Federal Deposit Insurance Corporation insures deposits at member banks.

If you have more than $250,000: Split across multiple banks, use joint accounts, or use a service like IntraFi (formerly CDARS) that spreads deposits across multiple banks automatically.

NCUA Insurance

Credit union equivalent of FDIC. Same $250,000 coverage per depositor.

Is My Online Bank Safe?

Yes, if:

• FDIC-insured (check at fdic.gov)
• Regulated by federal banking agencies
• Uses encryption and multi-factor authentication

Online banks like Ally, Marcus, Discover are as safe as Chase or Bank of America. Your money is equally protected.

Joint Accounts and Couples

Approaches

Yours/Mine/Ours Setup

Agree on: What counts as "shared" vs. "personal," a threshold for discussing purchases ($100? $200?), and how to handle income differences.

Key Takeaways

1. Open a high-yield savings account today. Stop losing money at 0.01%
2. Automate everything. Savings, bills, investments on autopilot
3. Use multiple accounts. Separate purposes prevent overspending
4. Avoid bank fees. They're almost always avoidable
5. Opt out of overdraft coverage. It's a fee, not a feature
6. FDIC insurance protects you. Online banks are safe
7. Check your automation monthly. Set and review, not set and forget
8. Couples need a system. Discuss it before combining finances