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Managing Your Money

Understanding Betterment’s Cash Analysis

Betterment's cash analysis provides you with feedback on how much extra cash you may be holding in your checking account, so you can earn more.

Articles by Chrissy Celaya, CFP®

By Chrissy Celaya, CFP®
Financial Planning Professional, Betterment  |  Published: November 5, 2018

Our cash analysis automatically gathers information on your spending patterns in your linked checking account and provides you with feedback on your account balance.

By default, we offer Betterment’s Smart Saver account as a place to hold your extra cash to earn more than you might in your checking account

As your financial advisor, our aim is to help you make more effective decisions with your money. For most people, good decision-making and advice starts with evaluating your cash flow to determine how to prioritize your regular investing habits. But, the truth is doing this manually and on your own is hard work. Today, we’re rolling out a new element of what Betterment offers—cash analysis.

How does Betterment analyze your cash?

Currently available for only a trial group of customers, Betterment’s cash analysis aims to identify any extra cash in your linked checking account that could be earning you more. Our in-depth analysis automatically gathers information on your spending patterns in your linked checking account and provides you with feedback on your checking account balance. You’ll find our analysis and recommendation from “Home” when you log in to Betterment. We update our cash analysis regularly, letting you know you may have extra cash that might earn a higher yield in a different account, such as Betterment’s Smart Saver account.

How do we analyze your checking account?

To provide you with feedback on how much extra cash you may be holding, we analyze your ongoing expenses in the linked checking account you use for making deposits and withdrawals from Betterment. We use this information to determine a target balance for your checking account. Your target balance is defined as the amount of cash in your checking account we predict you’ll need for the next five weeks’ worth of expenses. The difference between the current balance in your checking account and your target balance is what we consider extra cash.

*Current checking account balance – Your target balance = Extra cash*

In addition, our feedback never suggests that your account should contain less than $1,500.

To further understand Betterment’s cash analysis, read the full methodology.

What can you do with extra cash?

Since our cash analysis tells you when you may be holding extra cash, naturally, you may ask: “What should I do with my extra cash?”

Over the long-term, our advice is to identify your goals and consider deposit toward your goals—as Betterment is setup to help you do. By default, we offer Betterment’s Smart Saver account as a place to hold your extra cash to earn more than you might in your checking account. Smart Saver is Betterment’s low-risk investing account designed to seek a high yield. Smart Saver acts as the holding place for the cash, until you make a decision to move it into a more defined investment goal or withdraw it for spending purposes.

How will you know when you have extra cash?

Since your checking account will inevitably see new deposits over time—and our prediction of your target balance will update too—then you may be wondering how you’ll find out when you have extra cash available.

Of course, you can log in to Betterment to see our most recent analysis of whether you have extra cash, as long as your checking account remains linked and active. In addition to that, on a weekly basis, Betterment will send you an email if our analysis shows you’re holding more cash than we predict you’ll need.

3 Details to Remember about Our Cash Analysis

  • Betterment’s cash analysis will update regularly. As time moves forward, you can continue to log in to Betterment and see our cash analysis feedback for you anytime from “Home.”
  • Betterment only analyzes spending patterns in your linked checking account. To receive the analysis, your account must be connected using our normal connection, managed by our partner, Quovo. If you’ve manually linked your bank account, you will not receive cash analysis.

Only one bank account can be analyzed currently. You can only link one checking account to Betterment for deposits and withdrawals, so we’ll only analyze that account. If you’ve synced other bank accounts to Betterment to see your balances, those accounts are not used in our cash analysis.

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Understanding Betterment&#8217;s Cash Analysis

Understanding Betterment’s Cash Analysis

Betterment's cash analysis provides you with feedback on how much extra cash you may be holding in your checking account, so you can earn more.

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