Module 3: Banking & Financial Accounts

Choosing the Right Accounts and Tools for Your Money

Introduction

Welcome to Module 3! You've set your goals, tracked your income and spending, and created a budget. Now let's talk about where to actually keep your money.

Banking might seem boring, but choosing the right accounts can literally save or earn you thousands of dollars over time. Plus, the right setup makes managing money almost effortless.

In this module, we'll cover:

Types of bank accounts and what they're for
How to choose the best accounts for your needs
Understanding fees, interest rates, and account features
Online vs. traditional banks
Digital banking tools and security
How to organize multiple accounts strategically

Think of this as building the infrastructure for your financial life. Let's get started!

Part 1: Types of Bank Accounts

Checking Accounts

Purpose: Day-to-day money management – paying bills, making purchases, getting cash

Key features:

Debit card for purchases and ATM access
Check writing ability (though checks are becoming rare)
Unlimited transactions typically
Easy access to your money
Usually pays little to no interest

Best for:

Direct deposit from your paycheck
Paying monthly bills
Daily spending
Emergency access to cash

Typical fees to watch for:

Monthly maintenance fees ($5-$15/month)
Overdraft fees ($25-$35 per occurrence)
ATM fees (out-of-network)
Minimum balance requirements

Savings Accounts

Purpose: Store money you're saving for short-to-medium term goals

Key features:

Earns interest on your balance
Limited transactions (typically 6 withdrawals per month, though this has relaxed)
Separate from spending money (helps prevent impulse use)
FDIC insured up to $250,000

Best for:

Emergency fund
Short-term savings goals (vacation, down payment, etc.)
Money you don't need immediate access to

Types of savings accounts:

Traditional Savings:

Typically 0.01% - 0.05% interest (very low)
Offered by your regular bank
Easy to access

High-Yield Savings:

4.0% - 5.0% interest (as of 2024-2025, varies with market)
Usually online banks
FDIC insured same as traditional
May take 1-3 days to transfer to checking

Money Market Accounts:

Similar to high-yield savings
May offer check-writing and debit card
Often requires higher minimum balance
Interest rates comparable to high-yield savings

Certificates of Deposit (CDs)

Purpose: Save money you won't need for a specific time period while earning higher interest

Key features:

Fixed term (3 months to 5 years typically)
Higher interest rate than regular savings
Early withdrawal penalty (usually forfeits some interest)
FDIC insured

Best for:

Money you know you won't need for a set time
Part of your emergency fund (ladder strategy)
Saving for a future expense with a known date

Example:

1-year CD at 5.0% APY
Deposit $5,000
After 1 year: $5,250
But if you withdraw at 6 months, you might pay a penalty of 90 days interest ($62)

💡 Exercise 3.1: Account Needs Assessment

Let's figure out which accounts you need.

1. Do you currently have a checking account?
☐ Yes ☐ No

If yes, are you satisfied with it?
☐ Yes, it works well
☐ No, I'm paying fees
☐ No, it's inconvenient
☐ Not sure

2. Do you currently have a savings account?
☐ Yes ☐ No

If yes:

What's the interest rate? _____%
What's the current balance? $_______
Are you paying any fees? ☐ Yes ☐ No

3. Based on your goals from Module 1, what do you need accounts for?

☐ Daily spending and bill pay → Need: Checking

☐ Emergency fund → Need: High-yield savings

☐ Short-term savings goal (within 1-2 years) → Need: High-yield savings

☐ Medium-term savings (2-5 years) you won't touch → Consider: CD or high-yield savings

☐ Separate account for irregular expenses → Need: Savings account

4. My ideal account setup would be:

Part 2: Traditional Banks vs. Online Banks

Understanding the differences helps you choose what's right for you.

Traditional Banks (Chase, Bank of America, Wells Fargo, local credit unions)

Pros:

✅ Physical branches for in-person service
✅ Face-to-face help when you need it
✅ Can deposit cash easily
✅ Extensive ATM networks
✅ All services in one place

Cons:

❌ Lower interest rates on savings (often 0.01%)
❌ Higher or more frequent fees
❌ Minimum balance requirements common
❌ Less competitive offerings

Best for:

People who prefer in-person banking
Those who regularly deposit cash
People who value convenience of nearby branches

Online Banks (Ally, Marcus by Goldman Sachs, Capital One 360, Discover)

Pros:

✅ Much higher interest rates (4-5% vs. 0.01%)
✅ Lower or no fees
✅ Lower minimum balance requirements
✅ User-friendly apps and websites
✅ 24/7 customer service
✅ Better tools and automation

Cons:

❌ No physical branches
❌ Cash deposits are difficult/impossible
❌ Check deposits via mobile app (slight delay)
❌ Some people feel less secure without branches

Best for:

Savings accounts (where you want high interest)
Tech-comfortable people
Those who rarely need cash or in-person service

Credit Unions

What they are: Not-for-profit financial cooperatives owned by members

Pros:

✅ Often better rates than traditional banks
✅ Lower fees
✅ Community-focused
✅ Customer service oriented
✅ Same FDIC insurance (called NCUA for credit unions)

Cons:

❌ May have membership requirements
❌ Smaller ATM networks
❌ Sometimes less advanced technology
❌ Fewer branches

Best for:

People who qualify for membership
Those who want better rates but still want branches
People who value community banking

The Hybrid Approach (Recommended for Most People)

Strategy: Use both traditional and online banks for different purposes

Example setup:

Traditional/Credit Union Checking: Daily spending, bills, ATM access
Online High-Yield Savings: Emergency fund and savings goals
Transfer between them: Link accounts and move money as needed

Why this works:

Convenience of local banking for everyday use
High interest rates on savings
Best of both worlds
Usually no conflict – they work together nicely

💡 Exercise 3.2: Choose Your Banking Strategy

Based on what you've learned, what's your ideal banking setup?

For daily checking and spending, I prefer:
☐ Traditional bank with branches
☐ Credit union
☐ Online bank
☐ Not sure yet

For my savings and emergency fund, I prefer:
☐ High-yield online savings (highest interest)
☐ Same bank as checking (convenience)
☐ Credit union
☐ Not sure yet

My action plan:

Current situation:

What I need to change:

Accounts I need to open:

Accounts I need to close:

Part 3: Comparing Accounts – What to Look For

When shopping for accounts, here's your checklist:

For Checking Accounts:

✓ Monthly fees

Look for: $0 monthly fee OR easy fee waivers
Watch out for: Fees that are hard to avoid

✓ Minimum balance requirements

Look for: No minimum OR low minimum you can maintain
Watch out for: High minimums ($1,500+) that are hard to keep

✓ Overdraft fees and protection

Look for: Low/no fees, ability to opt out of overdraft
Watch out for: $35 overdraft fees with no warning system

✓ ATM access

Look for: Large network OR ATM fee reimbursement
Watch out for: Limited ATM access in your area

✓ Direct deposit

Look for: Easy direct deposit setup
Some accounts require direct deposit to waive fees

✓ Digital features

Look for: Good mobile app, mobile check deposit, bill pay
Watch out for: Clunky technology that makes banking frustrating

For Savings Accounts:

✓ Interest rate (APY)

Look for: 4.0%+ for high-yield (rates change with market)
Watch out for: Under 0.5% – you can do better

✓ Minimum balance

Look for: No minimum OR low minimum
Watch out for: $10,000+ minimums

✓ Monthly fees

Look for: $0 fees
Watch out for: Any monthly maintenance fees

✓ Transfer time

Look for: 1-2 business days to your checking
Watch out for: Extremely long transfer times

✓ Compound frequency

Look for: Daily compounding (earns more interest)
Watch out for: Monthly or annual compounding

✓ Additional features

Look for: Multiple sub-accounts for different goals
Nice to have: Automatic savings tools, goal tracking

💡 Exercise 3.3: Account Comparison

Research 2-3 accounts for each type you need. Use this worksheet:

Checking Account Options

Option 1: _______________

Monthly fee: $_____
Minimum balance: $_____
Overdraft fee: $_____
ATM network: _______________
Pros: _______________
Cons: _______________

Option 2: _______________

Monthly fee: $_____
Minimum balance: $_____
Overdraft fee: $_____
ATM network: _______________
Pros: _______________
Cons: _______________

My choice: _______________
Why: _______________________________________________

Savings Account Options

Option 1: _______________

Interest rate (APY): _____%
Monthly fee: $_____
Minimum balance: $_____
Transfer time: _____
Pros: _______________
Cons: _______________

Option 2: _______________

Interest rate (APY): _____%
Monthly fee: $_____
Minimum balance: $_____
Transfer time: _____
Pros: _______________
Cons: _______________

My choice: _______________
Why: _______________________________________________

Part 4: Understanding Interest and Fees

Let's break down two crucial numbers that affect your money.

Interest Rates: How Your Money Grows

APY (Annual Percentage Yield): The real rate you earn on savings, including compound interest

How compounding works:

Example 1: Low-interest traditional savings

Balance: $5,000
APY: 0.01%
After 1 year: $5,000.50 (earned 50 cents!)

Example 2: High-yield online savings

Balance: $5,000
APY: 4.5%
After 1 year: $5,230 (earned $230!)

The difference: $229.50 in one year just for having your money in a better account

Over 10 years, that $5,000 becomes:

Traditional savings (0.01%): $5,005
High-yield savings (4.5%): $7,839

That's $2,834 in extra money just from choosing the right account!

The Real Cost of Bank Fees

Fees might seem small, but they add up fast.

Common fees and their annual cost:

Fee Type	Typical Amount	Frequency	Annual Cost
Monthly maintenance	$12	Monthly	$144
Overdraft	$35	3x/year	$105
Out-of-network ATM	$3 + $3	2x/month	$144
Paper statement	$2	Monthly	$24
TOTAL			$417/year

That's $417 you could have put toward your goals instead!

💡 Exercise 3.4: Calculate Your Current Banking Costs

Review your last 3 months of bank statements.

Fees I paid:

Fee Type	How Often	Cost Each Time	Total Last 3 Months
Monthly fee	____	$____	$____
Overdraft	____	$____	$____
ATM fees	____	$____	$____
Other: ______	____	$____	$____
TOTAL			$____

Annual projection: Total × 4 = $_______/year

Could I avoid these fees by: ☐ Switching to a no-fee account
☐ Maintaining a higher balance
☐ Using in-network ATMs
☐ Opting out of overdraft protection
☐ Setting up low balance alerts

My action plan:

Part 5: Organizing Multiple Accounts

Having multiple accounts isn't complicated – it's strategic. Here's how to organize them effectively.

The Multi-Account System

Account 1: Primary Checking

Purpose: Income arrives here, bills paid from here
Keep: 1 month of expenses + buffer

Account 2: Spending Checking (optional but helpful)

Purpose: Discretionary spending (dining, entertainment, shopping)
Keep: Your budgeted spending money for the month
When it's gone, you're done spending

Account 3: Bills Savings/Sinking Fund

Purpose: Irregular expenses (insurance, car maintenance, gifts)
Keep: Accumulating monthly set-asides from Module 2

Account 4: Emergency Fund

Purpose: True emergencies only (job loss, medical, car repair)
Keep: 3-6 months of expenses (we'll build this in Module 6)
High-yield savings account

Account 5: Goals Savings

Purpose: Specific savings goals (vacation, down payment, etc.)
Keep: Whatever you're accumulating toward goals
Consider: Multiple sub-accounts for different goals

Naming Your Accounts

Most banks let you nickname accounts. Use descriptive names!

Instead of: "Savings Account 1", "Savings Account 2"
Try: "Emergency Fund - Do Not Touch", "Vacation Fund 2025", "Car Maintenance"

Why this matters: When you see the account name, you're reminded of its purpose. This prevents "borrowing" from savings.

💡 Exercise 3.5: Design Your Account Structure

Based on your goals and needs, design your ideal account setup:

Account 1: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 2: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 3: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 4: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 5: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Part 6: Automation and Money Movement

The power of multiple accounts comes from automation. Set it up once, then forget about it.

Automation Strategy

On Payday (Paycheck Direct Deposit):

Primary checking receives full paycheck
Automatic transfers trigger (same day or next day):
- → Emergency fund: $___
- → Goals savings: $___
- → Bills/sinking fund: $___
- → Spending account: $___
What's left in primary: Bills and essential expenses

Mid-Month:

Automatic bill payments process from primary checking

Throughout the month:

Spend from spending account
Don't touch other accounts

How to Set Up Automatic Transfers

Step 1: Link your accounts

If using same bank: Instant linking
If using different banks: Provide account/routing numbers
Verify with small test deposits (1-2 business days)

Step 2: Schedule recurring transfers

Set up through your bank's website or app
Choose: Weekly, bi-weekly, or monthly
Schedule day after your paycheck arrives

Step 3: Build in a buffer

Don't cut it too close
Leave $100-200 extra in checking as cushion
Prevents overdrafts if timing is off

💡 Exercise 3.6: Create Your Automation Plan

Based on your paycheck schedule and budget from Module 2:

My paycheck schedule: ☐ Weekly ☐ Bi-weekly ☐ Monthly ☐ Irregular

Payday: _______________

My automatic transfers (scheduled for ___ day after payday):

From Primary Checking To:	Amount	Purpose
_______________	$_____	_______________
_______________	$_____	_______________
_______________	$_____	_______________
_______________	$_____	_______________
Total automated savings	$_____

Bills set to auto-pay from primary checking:

__________: $
__________: $
__________: $

Amount left in primary for other expenses: $_______

Part 7: Digital Banking Tools and Features

Modern banking offers powerful tools. Here's what to look for and use:

Mobile Apps

Must-have features:

Check balance anywhere
Transfer between accounts instantly
Mobile check deposit (photo of check)
Bill pay
Set up account alerts
Find nearby ATMs

Nice-to-have features:

Spending insights and categorization
Savings goals tracking
Budget integration
Round-up savings (rounds purchases up, saves difference)

Account Alerts

Set up these alerts to avoid problems:

✅ Low balance warning (e.g., "Alert me when balance falls below $100")
✅ Large transaction (e.g., "Alert me for any charge over $500")
✅ Unusual activity (potential fraud)
✅ Direct deposit received
✅ Bill payment processed
✅ Weekly account summary

How to set them up: Through your bank's app or website → Settings → Alerts/Notifications

Overdraft Protection (and When to Use It)

What it is: Your bank covers a transaction that exceeds your balance

Types:

1. Standard overdraft (costly):

Fee: $30-35 per transaction
Bank covers transaction, charges fee
Can happen multiple times per day

2. Overdraft line of credit:

Links a line of credit to your checking
Interest charged on borrowed amount (usually better than fee)

3. Link to savings:

Transfers from savings when needed
Small fee ($10) or free
Much better than standard overdraft

Best option: Opt out of overdraft entirely

Transaction declines if insufficient funds
No fees
Forces you to track your spending

💡 Exercise 3.7: Set Up Your Digital Banking

Today's action items:

☐ Download my bank's mobile app

☐ Set up mobile check deposit

☐ Enable account alerts:

☐ Low balance
☐ Large transaction
☐ Direct deposit received

☐ Set up bill pay for at least 2 recurring bills

☐ Nickname my accounts with clear purposes

☐ Review my overdraft protection settings

☐ Link my checking and savings accounts for easy transfers

Part 8: Banking Security

Keeping your money safe is crucial. Follow these practices:

Password Security

✅ Use strong, unique passwords for each account
✅ Enable two-factor authentication (2FA) whenever available
✅ Never share passwords or write them down visibly
✅ Use a password manager (LastPass, 1Password, Bitwarden)
✅ Change passwords if you suspect compromise

Safe Banking Practices

✅ Use secure internet – avoid public Wi-Fi for banking
✅ Keep apps updated – install security updates
✅ Monitor accounts regularly – check for unusual activity
✅ Review statements monthly
✅ Shred financial documents before discarding
✅ Be skeptical of emails/texts – banks won't ask for passwords

Spotting Fraud

Red flags:

Transactions you don't recognize
Unexpected charges
Alerts about login from unknown device
Calls/emails asking for account info
Checks missing from your account

If you suspect fraud:

Call your bank immediately (number on back of card)
Freeze your account if necessary
File a fraud report
Monitor credit report
Change all passwords

Most banks offer zero liability protection – you're not responsible for fraudulent charges if reported promptly.

Common Mistakes to Avoid

❌ Keeping all money in checking
→ You miss out on interest and it's easier to overspend
❌ Choosing banks based only on convenience
→ Fees and rates matter more in the long run
❌ Not reading the fine print
→ Surprise fees happen when you don't understand terms
❌ Too many accounts without purpose
→ Keep it simple but strategic
❌ Ignoring monthly statements
→ Review for errors, fraud, and fee opportunities
❌ Keeping large amounts in low-interest accounts
→ Moving savings to high-yield accounts is free money
❌ Using overdraft protection as a credit source
→ It's expensive and creates bad habits

Key Takeaways

✅ Different accounts serve different purposes – organize them strategically
✅ Online banks typically offer much better interest rates for savings
✅ A hybrid approach (traditional checking + online savings) works well for most people
✅ Eliminate or minimize bank fees – they add up to hundreds per year
✅ Automate transfers and bill payments to make money management effortless
✅ Use account alerts and mobile banking features to stay on top of your money
✅ Name accounts clearly to reinforce their purpose
✅ Security matters – use strong passwords and two-factor authentication

Quick Wins You Can Do Right Now

Check your current savings interest rate – if it's under 4%, research high-yield alternatives
Add up fees from last 3 months – identify which ones you can eliminate
Set up 3 account alerts right now in your banking app
Nickname your accounts with clear purposes
Schedule one automatic transfer to savings for next payday

Before You Move to Module 4

Make sure you've completed:

✓ Exercise 3.1: Assessed your account needs
✓ Exercise 3.2: Chosen your banking strategy
✓ Exercise 3.3: Compared account options
✓ Exercise 3.5: Designed your account structure
✓ Exercise 3.6: Created your automation plan
✓ Exercise 3.7: Set up digital banking features

Reflection Questions

How much am I currently earning in interest on my savings?

$_______ per year

How much am I paying in bank fees?

$_______ per year

What's one change I can make to improve either of these numbers?

Do I feel more organized about where my money lives?

Looking Ahead

In Module 4, we'll tackle debt management – understanding different types of debt, strategies for paying it off efficiently, and smart vs. not-so-smart uses of credit.

Your banking infrastructure is now in place. Time to deal with what you owe!

Additional Resources

Bank Comparison Sites:

Bankrate.com
NerdWallet.com
DepositAccounts.com

Recommended Online Banks (as of 2024-2025):

Ally Bank
Marcus by Goldman Sachs
Capital One 360
Discover Bank
American Express Personal Savings

Note: Always verify current rates and features, as these change frequently.

"The best investment you can make is an investment in yourself... The more you learn, the more you earn." – Warren Buffett

"Don't just make money, make moves." – Unknown

Module 3: Banking & Financial Accounts

Choosing the Right Accounts and Tools for Your Money

Introduction

Welcome to Module 3! You've set your goals, tracked your income and spending, and created a budget. Now let's talk about where to actually keep your money.

Banking might seem boring, but choosing the right accounts can literally save or earn you thousands of dollars over time. Plus, the right setup makes managing money almost effortless.

In this module, we'll cover:

Types of bank accounts and what they're for
How to choose the best accounts for your needs
Understanding fees, interest rates, and account features
Online vs. traditional banks
Digital banking tools and security
How to organize multiple accounts strategically

Think of this as building the infrastructure for your financial life. Let's get started!

Part 1: Types of Bank Accounts

Checking Accounts

Purpose: Day-to-day money management – paying bills, making purchases, getting cash

Key features:

Debit card for purchases and ATM access
Check writing ability (though checks are becoming rare)
Unlimited transactions typically
Easy access to your money
Usually pays little to no interest

Best for:

Direct deposit from your paycheck
Paying monthly bills
Daily spending
Emergency access to cash

Typical fees to watch for:

Monthly maintenance fees ($5-$15/month)
Overdraft fees ($25-$35 per occurrence)
ATM fees (out-of-network)
Minimum balance requirements

Savings Accounts

Purpose: Store money you're saving for short-to-medium term goals

Key features:

Earns interest on your balance
Limited transactions (typically 6 withdrawals per month, though this has relaxed)
Separate from spending money (helps prevent impulse use)
FDIC insured up to $250,000

Best for:

Emergency fund
Short-term savings goals (vacation, down payment, etc.)
Money you don't need immediate access to

Types of savings accounts:

Traditional Savings:

Typically 0.01% - 0.05% interest (very low)
Offered by your regular bank
Easy to access

High-Yield Savings:

4.0% - 5.0% interest (as of 2024-2025, varies with market)
Usually online banks
FDIC insured same as traditional
May take 1-3 days to transfer to checking

Money Market Accounts:

Similar to high-yield savings
May offer check-writing and debit card
Often requires higher minimum balance
Interest rates comparable to high-yield savings

Certificates of Deposit (CDs)

Purpose: Save money you won't need for a specific time period while earning higher interest

Key features:

Fixed term (3 months to 5 years typically)
Higher interest rate than regular savings
Early withdrawal penalty (usually forfeits some interest)
FDIC insured

Best for:

Money you know you won't need for a set time
Part of your emergency fund (ladder strategy)
Saving for a future expense with a known date

Example:

1-year CD at 5.0% APY
Deposit $5,000
After 1 year: $5,250
But if you withdraw at 6 months, you might pay a penalty of 90 days interest ($62)

💡 Exercise 3.1: Account Needs Assessment

Let's figure out which accounts you need.

1. Do you currently have a checking account?
☐ Yes ☐ No

If yes, are you satisfied with it?
☐ Yes, it works well
☐ No, I'm paying fees
☐ No, it's inconvenient
☐ Not sure

2. Do you currently have a savings account?
☐ Yes ☐ No

If yes:

What's the interest rate? _____%
What's the current balance? $_______
Are you paying any fees? ☐ Yes ☐ No

3. Based on your goals from Module 1, what do you need accounts for?

☐ Daily spending and bill pay → Need: Checking

☐ Emergency fund → Need: High-yield savings

☐ Short-term savings goal (within 1-2 years) → Need: High-yield savings

☐ Medium-term savings (2-5 years) you won't touch → Consider: CD or high-yield savings

☐ Separate account for irregular expenses → Need: Savings account

4. My ideal account setup would be:

Part 2: Traditional Banks vs. Online Banks

Understanding the differences helps you choose what's right for you.

Traditional Banks (Chase, Bank of America, Wells Fargo, local credit unions)

Pros:

✅ Physical branches for in-person service
✅ Face-to-face help when you need it
✅ Can deposit cash easily
✅ Extensive ATM networks
✅ All services in one place

Cons:

❌ Lower interest rates on savings (often 0.01%)
❌ Higher or more frequent fees
❌ Minimum balance requirements common
❌ Less competitive offerings

Best for:

People who prefer in-person banking
Those who regularly deposit cash
People who value convenience of nearby branches

Online Banks (Ally, Marcus by Goldman Sachs, Capital One 360, Discover)

Pros:

✅ Much higher interest rates (4-5% vs. 0.01%)
✅ Lower or no fees
✅ Lower minimum balance requirements
✅ User-friendly apps and websites
✅ 24/7 customer service
✅ Better tools and automation

Cons:

❌ No physical branches
❌ Cash deposits are difficult/impossible
❌ Check deposits via mobile app (slight delay)
❌ Some people feel less secure without branches

Best for:

Savings accounts (where you want high interest)
Tech-comfortable people
Those who rarely need cash or in-person service

Credit Unions

What they are: Not-for-profit financial cooperatives owned by members

Pros:

✅ Often better rates than traditional banks
✅ Lower fees
✅ Community-focused
✅ Customer service oriented
✅ Same FDIC insurance (called NCUA for credit unions)

Cons:

❌ May have membership requirements
❌ Smaller ATM networks
❌ Sometimes less advanced technology
❌ Fewer branches

Best for:

People who qualify for membership
Those who want better rates but still want branches
People who value community banking

The Hybrid Approach (Recommended for Most People)

Strategy: Use both traditional and online banks for different purposes

Example setup:

Traditional/Credit Union Checking: Daily spending, bills, ATM access
Online High-Yield Savings: Emergency fund and savings goals
Transfer between them: Link accounts and move money as needed

Why this works:

Convenience of local banking for everyday use
High interest rates on savings
Best of both worlds
Usually no conflict – they work together nicely

💡 Exercise 3.2: Choose Your Banking Strategy

Based on what you've learned, what's your ideal banking setup?

For daily checking and spending, I prefer:
☐ Traditional bank with branches
☐ Credit union
☐ Online bank
☐ Not sure yet

For my savings and emergency fund, I prefer:
☐ High-yield online savings (highest interest)
☐ Same bank as checking (convenience)
☐ Credit union
☐ Not sure yet

My action plan:

Current situation:

What I need to change:

Accounts I need to open:

Accounts I need to close:

Part 3: Comparing Accounts – What to Look For

When shopping for accounts, here's your checklist:

For Checking Accounts:

✓ Monthly fees

Look for: $0 monthly fee OR easy fee waivers
Watch out for: Fees that are hard to avoid

✓ Minimum balance requirements

Look for: No minimum OR low minimum you can maintain
Watch out for: High minimums ($1,500+) that are hard to keep

✓ Overdraft fees and protection

Look for: Low/no fees, ability to opt out of overdraft
Watch out for: $35 overdraft fees with no warning system

✓ ATM access

Look for: Large network OR ATM fee reimbursement
Watch out for: Limited ATM access in your area

✓ Direct deposit

Look for: Easy direct deposit setup
Some accounts require direct deposit to waive fees

✓ Digital features

Look for: Good mobile app, mobile check deposit, bill pay
Watch out for: Clunky technology that makes banking frustrating

For Savings Accounts:

✓ Interest rate (APY)

Look for: 4.0%+ for high-yield (rates change with market)
Watch out for: Under 0.5% – you can do better

✓ Minimum balance

Look for: No minimum OR low minimum
Watch out for: $10,000+ minimums

✓ Monthly fees

Look for: $0 fees
Watch out for: Any monthly maintenance fees

✓ Transfer time

Look for: 1-2 business days to your checking
Watch out for: Extremely long transfer times

✓ Compound frequency

Look for: Daily compounding (earns more interest)
Watch out for: Monthly or annual compounding

✓ Additional features

Look for: Multiple sub-accounts for different goals
Nice to have: Automatic savings tools, goal tracking

💡 Exercise 3.3: Account Comparison

Research 2-3 accounts for each type you need. Use this worksheet:

Checking Account Options

Option 1: _______________

Monthly fee: $_____
Minimum balance: $_____
Overdraft fee: $_____
ATM network: _______________
Pros: _______________
Cons: _______________

Option 2: _______________

Monthly fee: $_____
Minimum balance: $_____
Overdraft fee: $_____
ATM network: _______________
Pros: _______________
Cons: _______________

My choice: _______________
Why: _______________________________________________

Savings Account Options

Option 1: _______________

Interest rate (APY): _____%
Monthly fee: $_____
Minimum balance: $_____
Transfer time: _____
Pros: _______________
Cons: _______________

Option 2: _______________

Interest rate (APY): _____%
Monthly fee: $_____
Minimum balance: $_____
Transfer time: _____
Pros: _______________
Cons: _______________

My choice: _______________
Why: _______________________________________________

Part 4: Understanding Interest and Fees

Let's break down two crucial numbers that affect your money.

Interest Rates: How Your Money Grows

APY (Annual Percentage Yield): The real rate you earn on savings, including compound interest

How compounding works:

Example 1: Low-interest traditional savings

Balance: $5,000
APY: 0.01%
After 1 year: $5,000.50 (earned 50 cents!)

Example 2: High-yield online savings

Balance: $5,000
APY: 4.5%
After 1 year: $5,230 (earned $230!)

The difference: $229.50 in one year just for having your money in a better account

Over 10 years, that $5,000 becomes:

Traditional savings (0.01%): $5,005
High-yield savings (4.5%): $7,839

That's $2,834 in extra money just from choosing the right account!

The Real Cost of Bank Fees

Fees might seem small, but they add up fast.

Common fees and their annual cost:

Fee Type	Typical Amount	Frequency	Annual Cost
Monthly maintenance	$12	Monthly	$144
Overdraft	$35	3x/year	$105
Out-of-network ATM	$3 + $3	2x/month	$144
Paper statement	$2	Monthly	$24
TOTAL			$417/year

That's $417 you could have put toward your goals instead!

💡 Exercise 3.4: Calculate Your Current Banking Costs

Review your last 3 months of bank statements.

Fees I paid:

Fee Type	How Often	Cost Each Time	Total Last 3 Months
Monthly fee	____	$____	$____
Overdraft	____	$____	$____
ATM fees	____	$____	$____
Other: ______	____	$____	$____
TOTAL			$____

Annual projection: Total × 4 = $_______/year

Could I avoid these fees by: ☐ Switching to a no-fee account
☐ Maintaining a higher balance
☐ Using in-network ATMs
☐ Opting out of overdraft protection
☐ Setting up low balance alerts

My action plan:

Part 5: Organizing Multiple Accounts

Having multiple accounts isn't complicated – it's strategic. Here's how to organize them effectively.

The Multi-Account System

Account 1: Primary Checking

Purpose: Income arrives here, bills paid from here
Keep: 1 month of expenses + buffer

Account 2: Spending Checking (optional but helpful)

Purpose: Discretionary spending (dining, entertainment, shopping)
Keep: Your budgeted spending money for the month
When it's gone, you're done spending

Account 3: Bills Savings/Sinking Fund

Purpose: Irregular expenses (insurance, car maintenance, gifts)
Keep: Accumulating monthly set-asides from Module 2

Account 4: Emergency Fund

Purpose: True emergencies only (job loss, medical, car repair)
Keep: 3-6 months of expenses (we'll build this in Module 6)
High-yield savings account

Account 5: Goals Savings

Purpose: Specific savings goals (vacation, down payment, etc.)
Keep: Whatever you're accumulating toward goals
Consider: Multiple sub-accounts for different goals

Naming Your Accounts

Most banks let you nickname accounts. Use descriptive names!

Instead of: "Savings Account 1", "Savings Account 2"
Try: "Emergency Fund - Do Not Touch", "Vacation Fund 2025", "Car Maintenance"

Why this matters: When you see the account name, you're reminded of its purpose. This prevents "borrowing" from savings.

💡 Exercise 3.5: Design Your Account Structure

Based on your goals and needs, design your ideal account setup:

Account 1: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 2: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 3: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 4: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Account 5: _______________

Type: ☐ Checking ☐ Savings
Purpose: _______________________________________________
Target balance: $_______
Bank: _______________

Part 6: Automation and Money Movement

The power of multiple accounts comes from automation. Set it up once, then forget about it.

Automation Strategy

On Payday (Paycheck Direct Deposit):

Primary checking receives full paycheck
Automatic transfers trigger (same day or next day):
- → Emergency fund: $___
- → Goals savings: $___
- → Bills/sinking fund: $___
- → Spending account: $___
What's left in primary: Bills and essential expenses

Mid-Month:

Automatic bill payments process from primary checking

Throughout the month:

Spend from spending account
Don't touch other accounts

How to Set Up Automatic Transfers

Step 1: Link your accounts

If using same bank: Instant linking
If using different banks: Provide account/routing numbers
Verify with small test deposits (1-2 business days)

Step 2: Schedule recurring transfers

Set up through your bank's website or app
Choose: Weekly, bi-weekly, or monthly
Schedule day after your paycheck arrives

Step 3: Build in a buffer

Don't cut it too close
Leave $100-200 extra in checking as cushion
Prevents overdrafts if timing is off

💡 Exercise 3.6: Create Your Automation Plan

Based on your paycheck schedule and budget from Module 2:

My paycheck schedule: ☐ Weekly ☐ Bi-weekly ☐ Monthly ☐ Irregular

Payday: _______________

My automatic transfers (scheduled for ___ day after payday):

From Primary Checking To:	Amount	Purpose
_______________	$_____	_______________
_______________	$_____	_______________
_______________	$_____	_______________
_______________	$_____	_______________
Total automated savings	$_____

Bills set to auto-pay from primary checking:

__________: $
__________: $
__________: $

Amount left in primary for other expenses: $_______

Part 7: Digital Banking Tools and Features

Modern banking offers powerful tools. Here's what to look for and use:

Mobile Apps

Must-have features:

Check balance anywhere
Transfer between accounts instantly
Mobile check deposit (photo of check)
Bill pay
Set up account alerts
Find nearby ATMs

Nice-to-have features:

Spending insights and categorization
Savings goals tracking
Budget integration
Round-up savings (rounds purchases up, saves difference)

Account Alerts

Set up these alerts to avoid problems:

✅ Low balance warning (e.g., "Alert me when balance falls below $100")
✅ Large transaction (e.g., "Alert me for any charge over $500")
✅ Unusual activity (potential fraud)
✅ Direct deposit received
✅ Bill payment processed
✅ Weekly account summary

How to set them up: Through your bank's app or website → Settings → Alerts/Notifications

Overdraft Protection (and When to Use It)

What it is: Your bank covers a transaction that exceeds your balance

Types:

1. Standard overdraft (costly):

Fee: $30-35 per transaction
Bank covers transaction, charges fee
Can happen multiple times per day

2. Overdraft line of credit:

Links a line of credit to your checking
Interest charged on borrowed amount (usually better than fee)

3. Link to savings:

Transfers from savings when needed
Small fee ($10) or free
Much better than standard overdraft

Best option: Opt out of overdraft entirely

Transaction declines if insufficient funds
No fees
Forces you to track your spending

💡 Exercise 3.7: Set Up Your Digital Banking

Today's action items:

☐ Download my bank's mobile app

☐ Set up mobile check deposit

☐ Enable account alerts:

☐ Low balance
☐ Large transaction
☐ Direct deposit received

☐ Set up bill pay for at least 2 recurring bills

☐ Nickname my accounts with clear purposes

☐ Review my overdraft protection settings

☐ Link my checking and savings accounts for easy transfers

Part 8: Banking Security

Keeping your money safe is crucial. Follow these practices:

Password Security

✅ Use strong, unique passwords for each account
✅ Enable two-factor authentication (2FA) whenever available
✅ Never share passwords or write them down visibly
✅ Use a password manager (LastPass, 1Password, Bitwarden)
✅ Change passwords if you suspect compromise

Safe Banking Practices

✅ Use secure internet – avoid public Wi-Fi for banking
✅ Keep apps updated – install security updates
✅ Monitor accounts regularly – check for unusual activity
✅ Review statements monthly
✅ Shred financial documents before discarding
✅ Be skeptical of emails/texts – banks won't ask for passwords

Spotting Fraud

Red flags:

Transactions you don't recognize
Unexpected charges
Alerts about login from unknown device
Calls/emails asking for account info
Checks missing from your account

If you suspect fraud:

Call your bank immediately (number on back of card)
Freeze your account if necessary
File a fraud report
Monitor credit report
Change all passwords

Most banks offer zero liability protection – you're not responsible for fraudulent charges if reported promptly.

Common Mistakes to Avoid

❌ Keeping all money in checking
→ You miss out on interest and it's easier to overspend
❌ Choosing banks based only on convenience
→ Fees and rates matter more in the long run
❌ Not reading the fine print
→ Surprise fees happen when you don't understand terms
❌ Too many accounts without purpose
→ Keep it simple but strategic
❌ Ignoring monthly statements
→ Review for errors, fraud, and fee opportunities
❌ Keeping large amounts in low-interest accounts
→ Moving savings to high-yield accounts is free money
❌ Using overdraft protection as a credit source
→ It's expensive and creates bad habits

Key Takeaways

✅ Different accounts serve different purposes – organize them strategically
✅ Online banks typically offer much better interest rates for savings
✅ A hybrid approach (traditional checking + online savings) works well for most people
✅ Eliminate or minimize bank fees – they add up to hundreds per year
✅ Automate transfers and bill payments to make money management effortless
✅ Use account alerts and mobile banking features to stay on top of your money
✅ Name accounts clearly to reinforce their purpose
✅ Security matters – use strong passwords and two-factor authentication

Quick Wins You Can Do Right Now

Check your current savings interest rate – if it's under 4%, research high-yield alternatives
Add up fees from last 3 months – identify which ones you can eliminate
Set up 3 account alerts right now in your banking app
Nickname your accounts with clear purposes
Schedule one automatic transfer to savings for next payday

Before You Move to Module 4

Make sure you've completed:

✓ Exercise 3.1: Assessed your account needs
✓ Exercise 3.2: Chosen your banking strategy
✓ Exercise 3.3: Compared account options
✓ Exercise 3.5: Designed your account structure
✓ Exercise 3.6: Created your automation plan
✓ Exercise 3.7: Set up digital banking features

Reflection Questions

How much am I currently earning in interest on my savings?

$_______ per year

How much am I paying in bank fees?

$_______ per year

What's one change I can make to improve either of these numbers?

Do I feel more organized about where my money lives?

Looking Ahead

In Module 4, we'll tackle debt management – understanding different types of debt, strategies for paying it off efficiently, and smart vs. not-so-smart uses of credit.

Your banking infrastructure is now in place. Time to deal with what you owe!

Additional Resources

Bank Comparison Sites:

Bankrate.com
NerdWallet.com
DepositAccounts.com

Recommended Online Banks (as of 2024-2025):

Ally Bank
Marcus by Goldman Sachs
Capital One 360
Discover Bank
American Express Personal Savings

Note: Always verify current rates and features, as these change frequently.

"The best investment you can make is an investment in yourself... The more you learn, the more you earn." – Warren Buffett

"Don't just make money, make moves." – Unknown