Reducing Spending

3 Ways To Pay Your Bills With Checking There are three different ways you can use Betterment Checking to pay your bills. Our mobile-first checking account can help make any tedious financial task easy. Paying your bills online with a checking account is an essential feature for most modern banking customers. For nearly everyone, being able to organize all of your monthly payments from a single funding account, selecting the details of the automatic payments, and then seeing a successful transaction are crucial checking components that may factor into choosing your financial institution. With a Betterment Checking account, you can easily pay your bills using your account information or your Betterment Visa debit card. Set up automatic payments for your monthly bills. Here are two ways you can set up automatic payments directly through vendors by providing them with your debit card information or your checking account and routing numbers. 1. Use your Betterment Visa debit card. You can simply enter your Betterment Visa debit card information on the merchant’s bill paying portal and it will pull directly from your Betterment Checking account. This can include the 16-digit card number, expiration date, and security code found on the back of your debit card. Your debit card is available for use anywhere Visa is accepted. 2. Use your account and routing number. You can use your account and routing numbers to pay your rent, student loans, credit card, phone bill, and more. Easily find your Checking account and routing numbers in your Betterment account by logging in on either a web browser or on your mobile app. When asked to choose the account type during payment, make sure to choose “checking.” Make an instant debit card transfer. Another way to pay your bills is by using your Betterment Visa debit card for instant transfers. For example, if your landlord uses third-party apps like Venmo, Cash App, and Zelle for rent payment, you can send an instant debit card transfer from your Checking account via your Betterment Visa debit card. However, not all landlords or property managers accept this, so make sure to confirm with them directly if they accept this method of payment. Betterment Checking: a financial experience made easy. With no overdraft fees or minimum balances, paying your bills with a funded Checking account can be stress-free: Rest easy knowing that your money is yours to spend how you see fit.

What’s A Checking Account, And How Does It Work? A checking account is a bank account for your normal money: the cash you might need day to day. Here’s everything you need to know about how they work. Checking accounts are at the core of all of our financial lives. Like many folks, I’ve had a checking account since I was 18, and while I’ve personally bounced between several banks (mostly because of geographical needs), one thing has remained constant. My checking account is the first thing I turn to for my daily needs: whether that be to pay my energy bill (which is continuously rising in this NYC heat), or to withdraw a $20 bill for pizza and some ice cream. Checking accounts are for your daily or monthly money. Because of this intimate relationship, your checking account should have some key functionalities.  Below, you will find Betterment’s guide to checking accounts and the details you should consider when selecting what’s right for you. Please note that Betterment is not a bank and this information is intended to be purely educational. What are checking accounts good for? Monthly Transactions: Checking accounts generally do not have limits on the number of monthly transactions you can make electronically, through your debit card, or at the ATM. On the other hand, with savings accounts, you may be limited. Variety of ways to use: You can use your debit card at merchants around the globe, withdraw cash from an ATM, make electronic transactions, and even write checks. Automatic transfers to other financial institutions: With a checking account, you can easily transfer money between your own personal accounts or to others. FDIC Insurance: If your bank is an FDIC member, your money in a checking account is insured by the U.S. Government for up to $250,000. See the FDIC's website for more information. What are checking accounts not good for? Interest Rates: Banks pay an average of 0.06% on checking accounts, and most pay as little as 0.01%. Because of this, you should consider limiting the amount of funds that you keep in your checking account to cover daily or monthly expenses. Keeping too much cash may harm you in the long run due to inflation. What kind of fees can be expected with a checking account? Monthly Maintenance Fees: Most checking accounts come with a monthly maintenance fee. The fee varies by bank, but is generally in the range of $0-20. Oftentimes there are easy ways to get around this fee, by maintaining a certain average daily balance (set by each bank), or by establishing and maintaining a direct deposit to your account. This can come right from your paycheck. Overdraft Fees: If you withdraw more than the available balance in your checking account, you may be subject to overdraft or Non-Sufficient Fund fees. These fees are generally in the range of $35. Many banks offer overdraft protection, which allows you to link another account (i.e. savings account or credit card) to your checking to prevent overdrafts. ATM Fees: If you withdraw from an ATM outside of your bank’s network, you may be charged a fee, generally $2.50-$3, sometimes more. If you believe that you’ll frequently be in need of physical cash, you might choose to open an account with a bank that has several ATM locations in your area. Some Things To Know When Opening A Checking Account Requirements: To get your account open, you’ll generally need a government-issued ID. You may need to provide proof of address as well through a copy of a bill. Some checking accounts require a minimum deposit upon opening (can be as low as $25). If you are under 18, you’ll need a cosigner to open. Features: Many of these are listed in the bullet points above, but are all factors you should consider when choosing a checking account. What are the fees associated with your bank? What are the balance requirements? Do you have any withdrawal restrictions? Are there ATMs near where you live or work? Your everyday money doesn’t need all the thrills, but needs to fit in with your lifestyle. Promotions: Some banks will offer promotions for moving over a certain amount of funds or opening multiple accounts at the same time. Of course, this shouldn’t be the only factor you consider, and you shouldn’t keep too much cash in your checking account just to get a bonus. Make sure to read the fine print and familiarize yourself with the promotional details so that you know what you’re signing up for. Recommended Use Of A Checking Account A checking account should be used to pay bills and for your day-to-day transactions. Therefore, you need to keep enough to cover these expenses—Betterment estimates that you need five weeks’ worth of expenses in your checking account. Basically, enough to cover one month of bills and other expenses in advance. Some customers may ask: why not more? We recommend limiting your checking balance for the following reasons: Limits Excessive Spending: The more “free cash” you have, the more likely it is to be spent. Maintaining an appropriate checking balance can help you stay within your spending range. Make Your Money Work Harder: As we reviewed earlier, checking accounts pay a nominal interest rate, making them a poor option for you to grow your money. For the five weeks’ worth of expenses, we are sacrificing growth for every day needs. For longer term financial goals, consider opening a Betterment investment account that can help you grow your money further. Betterment’s Solution: Checking A checking account is the core to personal finance. Betterment’s mission has always been to help our customers do more with their money so that they can live better. Because of that, being our customers’  primary financial relationship has always been a key part in achieving that mission. With the launch of Checking, we’ll be one step closer to that. Below are some of the highlights of Checking, made specifically to align with your best interests: No minimum balance. No monthly maintenance fees. Unlimited worldwide ATM reimbursements using your Betterment Visa Debit card. Direct deposit from your paychecks. Ability to fund Checking from external bank accounts. Transfer directly to and from Betterment Checking to Betterment investment goals $250,000 in FDIC insurance Join us as we redefine the future of banking services to meet the needs of everyday consumers.

How Banks Fail in Helping You Save Money You may not realize it, but our financial lives are shaped by a great divide: banking vs. investment managers. In between lies most people’s pinnacle challenge: saving for the future. I have the good fortune of being able to question the institutions that shape my financial life. I studied economics in school. I earned a CFA credential while working in consulting. I started a financial tech company when I found problems that the industry seemed content to leave unsolved. But not everybody can afford to question the institutions they work with. To most Americans, the bank is the bank. It’s where you put your paycheck, who you talk to for a car loan, what form you look at when you file your taxes. Your 401(k) is your 401(k); who provides it, what the investments are, what fees are charged—these are questions that most people only get to ask on occasion, if they ask them at all. Today, I see millions of people tied to two kinds of institutions often misaligned to their needs. The first is banking. Neither banks nor credit unions have a fiduciary duty to put their clients’ interests first. Instead, they have a proclivity for charging extra fees and an unjust ability to earn profit on the rates loaned out by the Federal Reserve as their clients lose their savings to inflation. The second is investment managers. Whether a 401(k) plan, an advisor, or a broker, investments are still designed mostly for institutions and the wealthy, and the managers are often far too focused on asset allocation when Americans’ real financial outcomes are most determined by savings. While I have critiques for each group, the greatest problem to me is the fact that there are two. Somewhere in between their bank and their investment manager, Americans lose out on the most important element of finance: Saving their cash. Make no mistake; your savings is what matters. It’s what matters when paying down debt. It’s what matters for starting a business. It’s what matters for securing a healthy retirement. And yet, banks typically don’t help you become a better saver; they encourage holding cash at the ready for spending and sell you loans when you don’t have enough. Meanwhile, most investment managers pay little attention to your saving; they focus on larger deposits, like retirement money withheld from a paycheck. Between working with a bank and an investment manager, we, as a nation, fail to save enough for the things we need. The everyday American deserves a cash advisor. The truth about the future is that saving is all we have. Younger generations can’t count on Social Security the way Baby Boomers still do. And the pension plans of yesteryear are gone. Not only that, students today are graduating with more student loan debt than ever before, and no other part of life is becoming cheaper. Houses, cars, kids—they’re all becoming more expensive, not less. The average American aged 35-44 has $133,100 in debt according to Money. As a nation, we’re mostly deep in the red, not the black. To avoid debt, to save enough for retirement, to successfully navigate inevitable emergencies, Americans need a partner who has their best interests at heart not just in investment advice but for managing their cash. For helping you manage the day to day, so that, at the end of the month, you’ve actually saved more for the future. We need a cash advisor perhaps more than any other kind of financial advisor. For years, RIAs have encouraged their clients to outline their financial goals, to set a budget, and to save enough to fund each of their goals. But what have we been able to do to help ensure our clients’ success? Coaching, support, suggestions—yes, RIAs have led in this arena. But is it working? Americans today are saving less than they ever have. And even worse, they’ve seen limited wage growth and increasing inequality at the same time. Forget budgeting. Cash advice must automate the act of saving. What investment managers and banks silently have agreed on is that saving each month is the client’s responsibility. It’s the client’s money, and so, it’s theirs to set a budget. To me, the suggestion to “set a budget” is a failure of advice. It implies a lack of empathy for how a wallet really works or how human minds decide to spend. These are the facts: The world gives us many reasons to spend, and it offers far fewer reasons to save. Store sales. Credit card rewards. Low interest rates. The world creates many reasons to buy things. Meanwhile, no part of the industry solves saving. Banks and investment managers leave it to their customers to solve. The solution is having an advisor that puts the work in to do what real humans struggle with: Automating your savings. Helping to keep your spending in check. And nudging you toward your long-term goals. Ask any financial engineer and she’ll tell you that predicting the right level of cash you need each month is no great feat. As predictive modeling and advanced technology goes, your cashflow isn’t a big mystery. The choice to build that business so that everyday Americans can live better? Now, that is a different story. America’s future depends on how we save cash. Who will solve it? You can look at national debt, student debt, Social Security insolvency, or growing income inequality. As a country we need ways to help people save, and so far, the answer I see suggested most is Mint, a budgeting tool from Intuit that only helps if you’re already good at budgeting to begin with. And if you’re not, it mostly serves to sell you credit cards or investment apps. And I don’t blame Mint; it’s great for budgeting, just not for the reality of saving. Will you trust a bank to help? Maybe one of the new online banks or app-based banks? Banks have every opportunity to change how we save for our goals, and yet, they won’t. They thrive when you’re using your debit cards and taking out loans. They love it when your savings sit growing at less than 1% while they’re loaning your money at 4%. When we, as a nation, need every ounce of the risk-free rate we can get to save for our goals, banks prove again and again that they’re not problem-solving, they’re taking advantage. So, who would you rather work with? The solution I see is that we have to turn to those whose interests align with our own. I want to see fiduciaries get into the business of managing cash and savings. I want registered investment advisors and CFP® professionals to become true cash advisors. To use innovative technology at scale. Yes. To drive empirically better behavioral outcomes. Absolutely. To make a profit. It’s a must. But, at the core, we need advisors acting in their customers’ best interests; not just for already-wealthy individuals, but for everyday Americans looking to save their way to wealth.