How I Organize My Money - Maximize Saving Account

I recently spent some time organizing my checking, saving, 401(k), investment, and IRA accounts. With the federal funds rate target changes from 0-0.25% to 4.75-5%, the news of the “Si” banks (Silvergate Bank, Silicon Valley Bank, and Signature Bank), and the turmoil of the markets, I feel I need to do better job managing my money.

I used to put all money in the checking accounts. It is convenient and trivial when the saving interest rate is 0.1%, but it is significant when the rate is 3-4% now. So, I made the following changes:

1. I aggregated all payments (mortgage, insurance, credit cards, utility bills, and others) to be paid from one checking account. This way, I can put minimum amount in all other checking accounts since they don’t earn interests.
2. Further, I found my mortgage company allows me to set up automatic payment from the SAVING account. This feature enables me to keep more money in the saving account to earn interests. Some credit card companies offer the same feature, too. So, especially for the large payments (mortgage, insurance, and main credit cards), I leverage the automatic payment feature to pay the bills from my saving account.

But there are things to notice when using the above tips:

• Does your bank have transaction limit of the saving account? Some banks have the rules like only the first 6 external transactions are free. But several banks (e.g. Wealthfront) has unlimited transactions for the saving account nowadays.
• Does your bank charge overdraft fee? Also, some banks (e.g. Capital One Bank) offer the overdraft protection nowadays.
• Check out the different rules of the checking, saving, and money market accounts. Some banks have better rates for Money Market but requires higher average balance. Some banks have better rate on Saving. The worst thing is that banks keep changing the rules. So, I set up a reminder to check my bank’s rule every 3 months. (If you know how to be event-driven to these rule-changing, please leave comments to teach me, thanks)

Here you go, this is how I organized my bank accounts to earn more interests. I also did some research on the money management tools (to see all your accounts in one place), 401(k) options, ETF expense ratios, Robo-Advisor, insurance, and other financial tools. If you find this article useful, please leave a comment and let me know. I will share more my learnings in the future. The more we learn, the more we earn.