How to Keep Your Expenses in Check: Account Aggregators
Do you know where your money goes every month?
We’re not sure how old you are, but back in our day, tracking expenses was much simpler. Pull out your checkbook, tally your expenses, and ta-da! A balanced budget.
Today, with Apple Pay, Venmo, Netflix, and the myriad of other ways to pay, it’s far more difficult to keep track of expenses. And if you’re not careful, you’ll find an abominable amount of spending dedicated to frivolous items. (Caramel macchiato anyone? How about $600 worth?)
This, dear friend, is why you need account aggregators in your life.
What is Account Aggregation?
Account aggregation is a tool that allows you to see all of your financial accounts in one place. This includes bank accounts, loans, credit cards, investments – the works. Instead of checking each account one by one, you can view everything altogether. It simplifies your money management process so you can save time overall. And, the less time you need to manage your money, the more likely you’ll stay accountable to your goals!
Now, which goals are we referring to, you ask? Well, financial goals vary from person to person, but the 50/30/20 rule is a great place to start. That is:
- 50% Needs – rent, gas, groceries
- 30% Wants – Netflix, surfing lessons, and the controversial avocado toast that everyone keeps talking about
- 20% Savings – savings (of course!) and paying off debt
If you haven’t built your own financial roadmap yet, the 50/30/20 ratio is a great rule-of-thumb to ensure that you’re maintaining a good balance between spending money today and saving money for tomorrow.
Why Account Aggregators are a Must-Have
Account aggregators give you a holistic view of your money. When you can see all of your money in one place, you’re better able to understand your flow of funds. This understanding will help you make better decisions for your long-term financial wellness.
But, enough with the abstract! Let’s see an example of how this works:
Example: The Emancipation of Spendy Sam
Meet Spendy Sam.
Sam can never seem to find enough money to put toward savings. No matter how hard he tries, his bank account is always empty before the end of every pay period.
Looking at his bank account, it's no wonder that Sam has a hard time saving money. Sam's bank, like most boring banks, offers only a laundry list of recent transactions. And it only provides information for one account. This means that Sam has no true insight into his overall spending behavior.
Sam's Boring Bank Account
Sam realizes that he needs help with his money habits. So, he opens a checking account with Axos Bank (obviously!) because their banking app has a built-in account aggregator. This means Sam can add all of his external financial accounts (like Chase checking accounts, Wells Fargo savings accounts, BofA mortgages, Fidelity investments, etc.) and view them from a single dashboard. Now, instead of rummaging through recent transactions for each account, he can quickly get insights as to where his money is going.
Holy meatballs – it looks like Sam is spending 40% of his monthly income on miscellaneous purchases for his computer!
Sam’s New Account (with Axos Bank, of course)
If you recall from the 50/30/20 rule, as savvy consumers, we only want to spend up to 30% of our monthly income on wants. And while Sam can argue that purchasing parts for his computer is a need, he knows that it can be more accurately categorized as a want. Therefore, 40% is far too high for his miscellaneous computer purchases.
So, being the upstanding citizen that he is, Sam decides to limit his miscellaneous expenditures to 30% so he can dedicate 20% to savings. He can do this, of course, because the Axos Bank mobile app allows him to track cash flow over time.
Sam’s Account Insights
And, just like that – Spendy Sam becomes Savvy Sam. By getting a holistic understanding of his flow of funds, Sam can make better decisions for his long-term financial health.
Great job, fictional Sam!
How to Get Started with an Account Aggregator
Overall, account aggregators are fairly easy to use. Just open your aggregator app, link your financial accounts, and use the data to make smarter money decisions! But, with an abundance of account aggregators on the market, which one should you choose? We have some ideas.
Choosing an Account Aggregator
When looking for the perfect account aggregator, you want to look out for four things:
- Consumer privacy
- Large catalog of available account connections
Of course, every account aggregator on the market claims that their services are the best, so do your homework. Before you connect just any account aggregator to your financial accounts, take a look at their security and consumer privacy policies.
Axos Bank: Mobile Banking with Built-In Account Aggregation
Juggling multiple financial accounts can be a pain. That’s why we added an account aggregator to the Axos Bank banking app! With the Axos Bank mobile app, you can:
- See all of your external accounts in one place
- Categorize transactions into different buckets
- Watch a chart of how your account balances change over time
So, say goodbye to the financial app toggle dance! Simply download the mobile app, link your financial accounts, and manage all of your money from one place.
It’s simple, fast, and completely secure. Browse our checking accounts here.
How to Keep Your Expenses in Check: Account Aggregators
This blog post was published by Axos Editorial Team on December 8, 2020 and last updated on December 15, 2020.