MULTIPLE BANK ACCOUNTS YOU NEED TO HAVE
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There are so many ways to organize your money, but this is one of the ways that helped us get out of debt (over $33k in credit card debt) and save money too.
The problem with putting all of your money into one bank account is that it gives you a false sense of having more money than you actually do, which can lead to unnecessary purchases and overspending. Trust me I know first hand.
Multiple bank accounts can be confusing, but with proper planning they canhelp you get your way out of debt, keep better track of your cash flow,and help yousave money so much faster. Even if you don’t enjoy budgeting , you’ll want to plan ahead for these common forgotten budget items.
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Here are the multiple bank accounts you should have if you want to get your finances in order.
EMERGENCY FUND
This bank account is the most important out of all the bank accounts you should have.
When moving from our last home we were hit with the unexpected cost of removing the underground oil tank we didn’t know about, reassessment fees from our condo’s homeowner’s association, a bigger mortgage on our new home, and significantly higher transportation costs.
Had we had an emergency fund with enough money in it to cover even just 3 months of our expenses we would have been able to recover much more quickly. In reality we ended up getting buried by more and more debt as we were trying to just pay our regular monthly bills.
Since we paid off our credit card debt, we have been steadily building up our emergency fund by continuing to sell and side hustle. Once we hit our mark I plan on moving our emergency fund into a bank account that can earn a little interest, but is easy to access.
If you’re still in debtstart offby buildinga small emergency fund of $1,000. You want to have at least a little bit to help you out on a rainy day.
Your goal should be to build anemergency fund with enough money to cover at least 3 to 6 months worth of expenses. Your emergency fund is your buffer in the case of a job loss, emergency home repair, accidents, etc.
We used the money we earned from shopping to pay off our debt faster. Now we use it for vacation.
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Keep it in an account that is accessible, but not too easy to access that you’ll be tempted to use it for anything other than an emergency.
Related posts:
* How to save money while you’re drowning in debt
* Using cash envelope wallets to budget your money
GENERAL SPENDING ACCOUNT
In our checking account we direct deposit enough moneytocover our recurring monthly bills.
This bank account covers everything fromour phone bill, electric, gas, security system, etc.
Everything that can be is automatically paid online. This ensures everything is paid on time and in full.
This month is our first month implementing the envelope system. Our groceries, entertainment, and a few other categories are paid strictly in cash. That cash comes out of this account. So far it seems like we are spending even less money, but I’ll update you soon.
Money inyour spendingaccount is constantly moving in and out. You need enough in it to cover your monthly expenses and a little extra to act as a buffer so you don’t have to fear going in the red.
COLLEGE/KID’S FUND
Before my daughter was even born we started a savings account for her. Once we saved more we transferred the kids’money into a money market account, which is an onlinehigh-yield savings account.
When we were fighting our way to pay off our credit card debtwe continued to make our weekly contributions to our kids’ bank account. At one point I did decrease the weekly amount.
I haddebated long and hard about using our kids’money to pay off our debts.
At the timewe had enough money to pay off all of our credit card debt, but I refused to touch their money. We did this for two reasons.
#1 Didn’t want to get into the habit of touching that money even though we knew we would pay it back.
#2 Wanted to learn the hard way how best to manage our money and stay out of debt in the future.
There are many options for saving for your kids’ futures. There are 529 plans, Roth IRAs, etc. Each has different tax benefits and restrictions. Research to determine the one that best fits your family’s needs.
VACATION/ENTERTAINMENT
We try to go on vacation at least once a year. Sometimes we just do local road trips and other times we go on cruises.
The amount of money people spend on vacation blows my mind.
We shop around for the best deals, try to go during non peak months, and pay in installments when available.
Put a set amount of money aside into your vacation account each month so that you can afford a trip each year without running the risk of putting yourself into debt.
INVESTMENT/RETIREMENT
My husband and I each have our own retirement accounts through work.
If you are fortunate enough to work for a company that offers a 401k plan with matching do it.
I am in the process of scrounging up some money to start a Roth IRA for my husband and me.
This is a bank account youshould have because no one is going to save for yourself better than you. I made the mistake a long time ago saving up money and just letting it sit in a checking account earning nothing in interest or return. Zilch.
Explore your options and don’t be scared. As much as having money siting in a bank account is safe, money left in a savings account doesn’t earn enough to even cover inflation. Let that sad truth sink in.
MORTGAGE/RENT
If you pay rent or have a mortgage, I would recommend having a separate bank account just for this.
Each month we automatically direct deposit enough money from each of our paychecks to cover our monthly payment plus a little extra so that we can make one extra mortgage payment by the end of the year.
This is a known expense and therefore should be automated.
HOLIDAYS/BIRTHDAYS
If you’re a big gift giver then this is an account you need to start now. The holidays are less than 9 months away.
Just because you may wait the last minute to buy gifts doesn’t mean you need to wait until the last minute to pay for them.
Put away just $20 a week and you’ll have $720 by the end of the year. If you spend more, save more.
Earn more money by visiting these posts on:
*Selling our way out of debt
*Fun money saving coloring page challenge
*Top ways to get cash back and extra savings
Start earning some Amazon gift codes and cash back now. Last year I was able to save up a few hundred dollars by the end of year for gifts.
Another alternative is starting a gift closet. Buy gifts throughout the year when they’re on sale. I’ve done this on and off. It’s great because I don’t have to give myself a headache trying to buy gifts at the last minute.
3 Things You Should Do With Each Bank Account
Name the bank account:
This makes you less likely to take money out for another reason other than what the account was intended. It can also be inspiring to want to save for a goal or special trip.
Automate:
Just try it. You’ll be surprised how fast you save up money. I just increased the amount we are putting into savings and haven’t noticed a difference.
Evaluate:
Periodically review your accounts and adjust the amount you are depositing into each as necessary. Now thatour credit card debt it paid we have more money to put intoother categories.
These are the 6 bank accounts our family has because they are the categories that are important to us. If you don’t have kids maybe you might have an account for your pets or your yearly golf outings.
Your goal is to create separate bank accounts for specific purposes that you want to save for over a period of time.You don’t want to get hit with paying for them all at once and risk having to go into debt.
Some banks allow you to open one account and divide them into multiple categories so you don’t have to open a bunch of individual accounts.
Most banks will insure up to $250,000 of your money in each account.
If you want to save money you have to tell it where to go.
Happy savings and don’t forget to pin these pins for later!
Why should I have more than one bank account
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