I have mentioned in several posts that I have multiple bank accounts, so I want to share with you why I have multiple bank accounts and their purpose. I have had at least two bank accounts (now I have more) for so long, that I can't even pinpoint when I started but it was after I started to budget by paycheck.
Most people have just one checking and one savings account, which is where I started, but I decided to separate my bill money from my spending money to make it easier to keep track of my spending and it would reduce any chance of me accidentally spending money dedicated to something else. As time went on and online bank accounts became more popular, I added a couple of online banks for the higher interest rate and now that I’m married (my husband thought I was crazy but now he gets it), I have added a few more accounts but I will explain each account and their purpose below.
Accounts
Fun Money - Yes, I started with this one. Everyone needs fun money. I can buy whatever I want from this account. I always joke that this account is at zero on payday, ok maybe not zero but it’s close to it. Most of the time I use the account to buy lunch during the week (I allow myself to purchase lunch once a week), personal shopping (I just bought the Fitbit Flex 2), laundry, etc. The income from my rental property also runs through this account (in one day, out the next). My automatic savings coming out of this account, so my online savings account, Qapital and Digit saves money from this account. If I need money to go toward another goal or want I will usually reduce my fund money to $50/ a week to make it happen.
The Joint Accounts
My husband and I have two different bill account accounts to eliminate any confusion.
Bill account 1 - Bill account 1 holds all of the rent, my student loan payment, and my son's private school tuition. Half of each payment is direct deposited into this account on payday and then paid the next month. We typically have a month’s worth of these payments sitting in the account at any given time.
Bill account 2 - Holds all of the utilities, cell phone bill, tithe & offering, other charitable contributions and it temporarily holds the groceries money. In the paycheck budget post, I mentioned splitting the larger bills in half and paying your smaller bills based on their due dates. These are those smaller bills, that are paid on payday based on whether they are due (the first 15 days of the month or the last last 15 days of the month).
Regular joint savings - This account is just for unexpected purchases that are not an "emergency" but are also not in the budget. You know, a speeding ticket, or if your kid’s phone stops working. I talk more about a regular or random savings account here. This account is also funded on payday.
High-Yield Savings - This is what I consider our emergency fund. My husband and I have a portion of our pay directly deposited in this account, too. We don't touch it, unless absolutely necessary but I do stash my son's school registration fee in this account until I need it.
Personal Money Market - This is my investment/help others account. I use this account to invest in money making opportunities and to help others in need. This account is listed in my budget as a bill and is funded every payday.
Online Savings Account - This used to be my "pay yourself first" account before I was married, most of the funds are now in our High-Yield Savings. Now, this is our travel fund. We like to travel so we put money aside to cash flow our trips.
Digit - If you haven't read my review on Digit you can check it out here. This is one of my random savings accounts that automatically saves for me from my fun money account. This account doesn't truly have a goal, right now I have been using it as a Sweet 16 gift fund.
Qapital - I just started using Qapital a few months ago just to test it out. It saves based on a preset rule I chose (it's currently set to round up to a dollar) toward a goal. Check out my review on Qapital here. I am currently deciding what will be the true goal of this account at this moment, but I’m currently thinking about using it to hold my son's senior year (of high school) expenses.
Regular Savings (attached to my fun money account) - This account was originally my regular savings before I got married. Now it's the holding account for my rental income that slides through my fun money account (I don't risk leaving it in there). I also will move whatever is left in my fun money account on payday into this account (even if it is a $1.00).
That’s it! I have 10 accounts! This list only includes my bank accounts and does not include my business, retirement or after-tax investment accounts. I also did not include my husband's or my son's accounts.
I didn't plan on having so many bank accounts originally, but I wanted to make money management easier for me. I know some people may feel that more accounts do not equal easy money management but I am actually able to track these accounts very easily since most of them are at the same bank.
There are some changes I am looking into when it comes to my multiple bank accounts, such as:
My rental income sliding through my fun money account - It’s not a problem, it just requires a little work on my part.
Digit - Digit is now charging $2.99/month after 100 days. I have saved a lot of money with them and it's easy (no thought) but I want to see if I can duplicate the same savings rate with Qapital since they are free.
I am planning for a huge change that will affect my family in the next 2 years so I have this new savings goal that's outside of anything else we save for. So right now I'm trying to decide if I want to save the money in our high-yield saving (I'm not really sure if I want to open another account) or if I want to direct the funds into the online savings account. This is still up to debate, my finance mind says the high-yield savings but then I will have to track the amount separately. My lazy mind, says save the money in our online saving account where we can bucket the funds so I don't have to track it but it pays less interest.
Groceries - I don't want this money in the Bill Account 2, but my husband does. I can’t propose a compromise because I'm still trying to decide where we can house the money. I would open another account at our credit union but they don't have the capability to link checking accounts and I hate calling into the bank. I need to be able to transfer money online and I'm not an envelope method person either (it wouldn't work for us, my husband also grocery shops) so I need to find a way to keep this easy for the both of us.
So now you know about my multiple bank accounts and their purpose. I'm not telling you that you need 10 accounts if just checking and a savings works you, great. If you think you need an extra account will make your life easier, open one extra account (checking or savings) based on your goals. If you are disciplined open it at your current bank, if not, open it at a bank that is hard for you to access. Having multiple bank accounts has made it easier to manage my money (along with paycheck budgeting) and reach my financial goals.
What do you do to make managing your money easier?
