You need to start allocating with PayPal.  Here’s why.  Last week, Judy let you in on a way to multitask with money: allocation. By spreading money over multiple bank accounts, you can save for more than one goal at a time. Judy’s secret to avoiding fees on her multiple accounts is to use a small bank, but I’ve found another way to allocate for free.

PayPal, the original money-moving app, has a feature called Goals. Goals are separate sub-accounts of your main PayPal account, and each one has its own ledger. The best thing about PayPal Goals is that you can have as many of them as you want at no additional cost. An allocator’s dream.

When there is money in a goal, it cannot be spent unless you transfer it to your main PayPal balance. From there, you can transfer it to your bank for free and it arrives “within minutes.” 

Considerations When Allocating With PayPal

Now that you know about one of its useful features, it’s time to talk about the limitations of PayPal:

  • PayPal is not a bank, but it has many of the things a bank has. You can get a debit card and routing number, but not checks.  
  • PayPal is not FDIC insured. If PayPal goes under, your money goes with it.

I could see using a PayPal Goal to allocate for things like groceries or gym dues. If you use PayPal to make online purchases, it provides an extra layer of protection against bad products and scams. You can even transform your good, American dollars into Bitcoin on PayPal.

While PayPal is an excellent tool, Venmo has emerged as the dominant way to send money lately. Venmo can also be good for your bottom line, especially if you have one of those friends who is always somewhere else when the check comes. Now you can have Venmo shame them while you relax!

At Judith Heft & Associates, we can help you figure out what’s safe to put in PayPal, and what should really be in a bank. We can review your allocations with you, and make suggestions for new ones. Contact us for more information!