4 Money Management Benefits of Keeping Your Bank Accounts Organized

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A record 96% of households in the United States have a bank account, according to the Federal Deposit Insurance Corporation. Bank accounts are a useful tool for managing money effectively, and there are many different ways people can use bank accounts to get organized, track their expenses and improve their financial lives. 

Simon Blanchard, an associate professor at Georgetown’s McDonough School of Business, conducted a survey on financial mindfulness, which found that practicing financial mindfulness can lead to better financial outcomes.

Keeping an organized system is one way to effectively manage money and achieve financial mindfulness. Here are some key benefits of keeping your bank accounts organized.

Also see how many bank accounts you should have.

Reduce Financial Stress

The unknown is incredibly stressful for people. Knowing what’s in your bank account, when you get paid and when your bills are due can reduce financial stress.

Even if you don’t have a significant amount in your accounts, being aware and mindful of where you stand is a positive first step in money management.

Track Expenses

When your bank accounts are organized, it’s much easier to track your expenses. You can look to see that your bills have been paid and that your paycheck arrived on time.

Tracking your expenses takes only a few minutes a day and can help you feel on top of your finances.

Catch Fraud

When you’re organized with your finances, it’s much easier to catch fraud.

You can see if someone used your bank information without your authorization. You can also see if there are unknown charges on your accounts and report them to your bank immediately.

Prioritize Financial Goals

Organizing your accounts and managing them in a specific way can help you prioritize and reach your financial goals. For example, one common money management system is to keep a savings account for each financial goal you have, whether that’s buying a new car or taking your family on a vacation.

Money Management Systems

Here are a few examples of money management systems you can try using bank accounts.

The High 5 Banking Method

Sahirenys Pierce, a financial planner and the creator of Poised Finance & Lifestyle, created a money management method called the High 5 Banking Method. With this method, Pierce advised people to create five bank accounts: two checking accounts and three savings accounts.

Use one checking account only for bills and the other for lifestyle purchases, like entertainment. Your savings accounts should include an emergency fund, a short-term goals savings account and a long-term goals savings account.

Goal-Based Accounts

Many banks now offer goal-based savings accounts. This is where you can edit your bank account’s name to reflect your savings goals.

This works especially well for savings goals that you want to reach in five years or less. For goals that are beyond five years, it may be wise to consider investing.

Separate Investment Accounts

Many experts share their money management systems, but they often center around checking accounts and savings accounts. It’s also important to incorporate investing accounts into your money management strategy.

In addition to your employer-sponsored retirement accounts, you can open your own investment accounts in order to reach other goals you want to achieve before retirement age.

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