As the new year approaches, I always try to think of where I would like to focus my time and energy in the coming year. I usually end up with a few goals to improve my lifestyle and a few that will improve my family. One goal I always seem to have is paying off debt and making financial improvements for my household. One thing that I tried last year was multiple bank accounts. I have a total of 7 and it works great for my family!
I know it might sound crazy, but I have 3 savings accounts and 4 checking accounts (7 accounts total!!). I have found this makes it so much easier to manage my family’s money without mistakenly spending money that I don’t intend to spend. So here is a breakdown of my accounts:
- Checking: Bills – This is pretty self-explanatory, but we use this account to pay all of our household bills. Typically the money from our paychecks goes straight to this account and then is divided up accordingly.
- Checking: My account – this is the money that we budget for my personal spending. This does not include groceries, items for the house, gas for the car, etc. Those items are all budgeted for in my monthly budget.
- Checking: My husband’s account – same as mine.
- Checking: Envelopes account – This goes with the Dave Ramsey method of using envelopes of cash to pay for certain items, such as groceries, gas, eating out, etc. I find sometimes that using cash is hard when both my husband and I shop, so we have to keep the cash in a central location (which was in an envelope at home). This became an issue if we were out and needed to run to the store or forgot the envelope. If the envelopes work for you, you might not need this account.
- Savings: My son – we have a savings account for my son that we opened when he was born (you should consider having an account for each child). When people give us money for him it goes into this account. We also have a savings plan with a financial planning company that we contribute to monthly.
- Savings: Emergency – This is for emergencies only. I have read several different articles about how much you should have in this account, from $1000 to 6 times your budget. I fall somewhere on the lower end of this but I think you should at least have enough money to cover your budget for one month (two months if there is only one income). This money is ONLY for EMERGENCIES, not wants…only needs.
- Savings: Other – This account is for whatever you are saving for at a given point in time. At one point we were saving for a down payment for a house in this account. You might save for a car, vacation, Christmas spending or anything else you can think of that you or your family want to do in the future.
Note: All of my savings accounts are high yield accounts with an online bank. I have found that online banks have better annual percentage yields. My current accounts have 1.00% interest versus 0.03% with my other bank.
What methods do you use to save and budget your money?
Good luck with your New Year’s goals!