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Banking — we all have to do it, but do we all know How to? It’s not really taught in school and can be difficult to manage. GOBankingRates spoke to banking and finance experts to uncover some practical ways to make your banking work for you.
First things first: You need a bank account. Michael Martino, head of Diverse Customer Segments for Consumer, Small and Business Banking at Wells Fargo, stressed the importance of accessible banking services. “Having a bank account is a critical first step to building generational wealth, not only to manage daily expenses but also to create opportunities for the future,” he said.
With that in mind, here are seven changes you can make to your banking habits to build wealth faster.
Discover affordable bank account options
One of the first steps to building wealth is making sure you have the right account for you. Martino pointed to a troubling statistic. “Many U.S. households do not have a traditional checking or savings account, and some rely on costly banking alternatives, which can result in significant lifetime fees and a potential loss of $360,000 in generational wealth,” he said.
To solve this problem, Martino suggested considering Bank On-certified accounts. “Consider opening a Bank On-certified account like Clear Access Banking from Wells Fargo, which offers features like no overdraft fees and no monthly service fees for account holders ages 13 to 24,” he shared. “These accounts are especially beneficial for those with irregular payment schedules because they provide a safe and reliable way to manage money.”
Whether you’re with a large bank like Wells Fargo or a smaller credit union, make sure your bank accounts offer the options you need. Compare offers before you commit to make sure you’re getting the best deal. Not all accounts are the same, and you’ll quickly find that out when you start looking.
Use financial education resources
Knowledge is power, especially when it comes to managing your finances. Martino recommends taking advantage of all the resources your bank has to offer—even if it’s not your bank.
“Take advantage of free financial education and coaching services at our HOPE Inside centers in select Wells Fargo branches, which offer free financial education and one-on-one coaching sessions with bilingual financial advisors – whether you are a Wells Fargo customer or not,” he said.
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These resources can provide you with personalized guidance to help you manage your money more effectively.
“These centers offer one-on-one sessions with bilingual financial advisors who can help you manage your money, improve your credit score, create a budget and set financial goals tailored to your needs,” Martino said. Most banks offer such services, so be sure to ask an employee how to meet with an expert to put your bank to work for you.
Monitor and improve your credit score
As you probably already know, your credit score plays a big role in building wealth.
“Your credit score is a critical aspect of your financial health,” Martino explained. “Understanding it and actively improving it can open you up to better financial opportunities, including lower loan rates and higher chances of approval for rental or loan applications.”
This proactive approach not only ensures you get the best loan rates, but you’re also always informed about your entire financial situation. Knowledge = power.
Set and review actionable financial goals
Having clear financial goals sounds simple, but it can be harder than you think. However, it is incredibly important. If you don’t plan for success, you will never know what is possible.
Martino offered this practical advice: “Start by setting clear, actionable goals, such as building an emergency fund or paying off a small debt. These targeted steps can improve your financial stability and motivation and lead to better daily financial decisions. Simple practices, such as cooking at home instead of eating out, can contribute to significant long-term savings.”
Optimize your liquidity reserve
Of course, it’s important to have savings, but it’s equally important to make sure your money is working for you.
Thomas J. Brock, CFA, CPA, an annuity.org expert with over 20 years of experience in investing and finance, advises: “To build wealth faster, it is crucial to maintain a sufficient (but not excessive) cash reserve. Don’t hold too much cash. Try to invest every penny you save that exceeds your liquidity goal.”
So invest the bulk of your money, but make sure what’s liquid is also working for you. Brock has some thoughts on how to do that.
He said, “Make sure your cash reserve is in a high-yield savings account or money market fund. The most competitive investments in this space offer returns in excess of 5.00%. If your cash reserve is large enough, you may be able to get as much as 5.50%.”
Rethink your salary deposit strategy
Saundra Curry, co-founder of BC Holdings, LLC, offered a unique approach to saving. “Have your paycheck deposited into your savings account or money market and take out the amount you need to fund your budget. Most people who make this small change and stick with it save more money.”
This way, you can prioritize saving over spending, potentially resulting in a growing bank account without having to think about it much.
Automate your finances
Curry emphasized the importance of automation in building wealth: Automate your payments.
“Make sure you never make loan or credit card payments late,” she said. “Late payments significantly lower your credit score (they account for 35% of your credit score), which makes it more expensive for you to borrow money.”
She also suggested setting up automated investing: “If you bank with a financial institution that has a partnership with an investment firm (e.g. BOA and MerrillEdge, USAA and Charles Schwab), it’s easy to open an account and start investing. Just do it and set up automated investing every month.”
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