Latest posts by Kumiko Ehrmantraut (see all)
- How to Start a Budget When You Live Paycheck to Paycheck - September 18, 2019
Over the last 5 years, I have tried every budgeting method out there – the half payment method, the once-a-month method, the cash envelope method, and the list can go on and on. With every method, I learned more about what works for my family and what doesn’t. Ultimately, we do what works best for us. I simply took what worked from each method and compacted them into a budgeting system that has helped us pay off more than $16,000 worth of debt.
One of the things that helped my family is having several different bank accounts. It may sound silly but it gives my family valuable insight on not only how much money we have to spend on the things that matter but also where our money is actually going.
With the help of a paycheck bill tracker, an online calendar budgeting program, and our many bank accounts we have found the solution to managing our money. This article is not about implementing a budget. It’s about organizing your finances in a way that’s easy to understand, easy to use, and ultimately creating something that you will actually stick to.
Here is a breakdown of the 6 bank accounts we use and why you should add multiple bank accounts into your money management plan.
1. Main Joint Checking Account
This account is used for paying our bills and our main living expenses. Things like our cell phone bill, utilities, and sewer bill get paid from this account. This is also the bank account that we pay our mortgage from. We got a slightly lower interest rate on our mortgage if we set up automatic payments. Since our paychecks are automatically deposited into this account every month it just made sense to set up the mortgage payment with this account. A big percentage of our budget is paid from this account.
2. Irregular Bills (Non-Monthly Bills)
This account has saved us more times than I can count. Not only does it save us from having to put big amounts on our credit card but it also reminds about upcoming non-monthly bills that have to be paid. These are bills that we pay semi-annually or annually. Things like my husband’s motorcycle insurance and our car insurance are paid from this account.
For us, coming up with hundreds of dollars that we were not prepared to spend was difficult. It’s so much easier to set a bit of money aside every month and to break the big bill down. When it’s finally time to pay it, the money is already put away in this account to pay for it.
We also found that it’s cheaper for us to pay for insurance annually. We would actually be charged a small monthly fee to set up monthly payments for our car insurance and motorcycle insurance. This was the main reason we started this checking account.
3. Vacation Account
What’s life without a little vacation every once in a while? While this is not something that is super important to have in your budget, a little relaxation and down time is super important to our family and something that we really strive for. As a full-time working mom, a blogger, and wife, I found that I am only the best version of myself when I find time to actually breathe and enjoy the important stuff.
I think that it’s also important to note that we do not budget every month for this category or have it listed in our budget. This account is used when we have a little extra money at the end of the month. It’s a goal that we fund only when we can. Maybe one of your money goals would be creating art. You could use a similar account to set money aside for art supplies (I know from personal experience this isn’t the cheapest hobby).
Even if we decide on a stay-cation, having money set aside to visit a local theme park or enjoy a full day at the zoo is always nice.
4. Emergency Fund
Even if you decide against having multiple bank accounts, this one is a must! There is nothing that will save you more from money management than having money set aside for emergencies. This bank account should be kept separate from your main checking account and should only be used for emergency situations ONLY. Believe me, I know the struggle of dipping into this account, but it’s imperative that you always establish a minimum amount in this account.
Having cash to cover emergencies saves you from high-interest payments and even more stress on top of the emergency itself. I suggest keeping 3-6 months worth of living expenses in this account. Though that number may seem high, it will definitely save you from an unexpected layoff or medical situation. It took one time of us needing this account for me to realize how important it is to have one.
5. Child Savings Account
We all know kids can be expensive. For us, this account is mainly used to cover the cost of Christmas gifts and our son’s birthday expenses. We did something different for my son’s birthday this year. We took him to a local water park and wanted to cover everyone’s admission fee into the park. We didn’t have as many people as we expected but had the funds ready just in case. All 3 prior years we held a BBQ at our house where my husband LOVED to crazy on the food and drinks. All of this was covered from this account.
Now that my son is in preschool, we also set money aside to cover school costs and supplies. $150/month may not seem like much but to us, that’s a big monthly expense. I put about $40 a paycheck into this account. (My husband gets paid weekly).
6. Business Account
Last but not least, we have a business account. As a blogger who is trying to take her business to the next level, this account is imperative for me. I set a budget of $100/mo that goes into this account. Right not, this is pretty much covering my monthly expenses and leaves a little extra in the account every month that is slowly but surely adding up. I pay for things like email marketing, eCommerce, and photo shoots from this account.
Recently I have been putting $400/mo into this account as I currently went through a complete re-brand and outsourced the work to a fantastic designer. Truth, I just couldn’t do it by myself and it has been the best decision I have made for my business so far.
What Bank Accounts Do We Use?
This is a question that I get asked a lot. 2 of our accounts are held at local credit union. What I LOVE about our savings accounts at Spokane Teachers Credit Union is that there is no minimum balance required and they give you 5.09% interest on the first $500 deposited into the account. We currently have our emergency account and child savings account held there. There is also no minimum amount to open the savings account with them which means you can literally start with $1. You can do as many withdrawals or deposits as you need without a fee. The downside is that you only get one First5 savings account per member so I made my husband sign up for one as well and everything is managed online.
Our main checking account is with Chase Bank. This is where our mortgage is held and it was just easier to have our main checking account with them. For the last 4 years, we really have nothing to complain about.
- Consider Radius Bank and Axos Bank for online checking accounts.
Our other 2 accounts are held with Ally Bank. They are all online savings accounts and have no monthly maintenance fees. You earn interest on your money, get unlimited deposits and there is no minimum balance required. The downside to these accounts is that you only get 6 transactions (withdrawals) per statement cycle. To be honest, this really isn’t an issue for the accounts that we have with them.
- Check out UFB Direct and CIT Bank for high-interest savings accounts.
How Do We Manage All of Our Cards?
The answer is really simple. I use different color tape. I had a ton of crafting tape lying around and decided to use them to color code our debit cards. I also use a sharpie to label each one. Having them color coded makes it super easy to find the card that I need quickly. You can also find a TON of different colored tape at Michaels or Hobby Lobby in their clearance bins. I can usually find them for around $1. So it would cost me about $6 to label all of our cards and still have plenty left over for crafts. Win-Win.
I don’t carry all of our cards with me all the time. Our vacation, child savings, and irregular bills account are really planned events and most of the time I have a heads up on when I have to use them. The ones I carry in purse are our main joint checking account and emergency account because I use them at such random times. There is no telling when I will wind up at the grocery store or when an emergency will happen.
Your money goals and situation might be different than mine and that’s OK. Use these accounts for things that are important to you. That’s the only way you will be successful. Make them relevant, something that is important to you or create one that will help you relieve some financial stress. Just the thought of having a plan in place will do wonders for your financial mindset.
Do you have multiple bank accounts? Share your experience with us in the comments!
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