It’s easy to spend that money if it’s a big number.
You say: I got this, there’s so much money, what’s $50 towards some take-out food going to do?
You’re probably losing track quickly and then when it comes time to pay for your, let’s say, pet’s vet bill, you’ll have to put it on your credit card, or dip into your hard earned savings. And it just keeps on escalating.
What if you could separate your money into multiple savings accounts in order to keep the balance and be able to pay for your life’s expenses. This way you’ll have an expense come up and depending on which category, you’ll extract money from a specific account that has been building up just for this exact expense.
It’s exactly like the envelope cash system but stored at the bank. Once I’ve created my budget, I use both systems and I’m really seeing the change in my savings and spending.
Key Multiple Savings Accounts
1. Everyday – Checking Account
This is where the money comes in and this is where you’ll separate into your other accounts. I keep money in here that will be used for monthly bills, like my car payments, mobile, gas, and the money that I’ll take out for my envelope system.
2. Yearly Bills
These are bills that you see mostly a couple of times to once a year, like insurance, license renewal, car maintenance, and dentist. When you’re not expecting these, or you’re cringing that it’s coming close to the time you’ll be receiving these bills in the mail. It’s no fun. No need to fret anymore! Just simply pay out of this account, you have the money stashed here, no headache needed.
3. Emergency Fund
Having an emergency fund for those times of emergency, you’ll be less stressed knowing you have money set aside for just this unfortunate event. Start by fiercely getting $1000 into an account. $40 every 2 weeks will bring you to $1000 in a year. You could even save greater if you changed some spending habits. And then after that, start building up to 3 to 6 months of pay, this way you’ll even have funds in case of layoff situations.
4. Pet Food, Supplies and Vet
Pets are awesome and we want to be able to give them a life of love and well being. Putting money aside for your pets will just make it easier for when you need to bring them to the vet or buy them the essentials. I put a little extra in there for some new toys here and there. Our dogs get very excited when coming back from the pet store and we’re holding a bag. It’s like they know they’re getting something.
5. Vacation and Gifts
No more big bills after Christmas. Money is put aside, budgeted and we come out stress-free from the holidays. Same goes for our vacation, we set aside money towards where or what we want to do the year before. Then when it comes to the time, we have the money sitting here and we can just go on with our vacation.
I actually have 6 bank accounts. I have a separate account where I store money for my business expenses like Hosting, Tailwind, and ConvertKit. It’s a great way to separate business from personal. Since my business isn’t as big yet, this is fine for now.
How To Manage Multiple Bank Accounts
Why You Need Multiple Savings Accounts
This has been a game changer for me! You need several multiple savings accounts for budgeting alongside to having an envelope system in place. By having these two systems in place you won’t be tempted by the big number in your checking account.
You Have Goals to Meet
If you haven’t set Personal Financial Goals yet, I suggest you head over to my article: Setting Your Financial Goals, there I cover what kind of goals to go for as well as how to track them.
You can easily meet your goals with the multiple savings accounts system. Having a savings account into a place to add the money that you’re trying to gather for your goals.
You Need A Budget
Once you have your goals set, you’ll need to have a budget in place. It doesn’t need to be a complicated budget, you can even grab my template and how I do mine in this article: How To Budget & Easily Stick With It. This will help you determine which savings accounts you need to create in order to make this whole thing work.
Less Chance To Spend Your Money Frivolously
It’s easy to see Friday’s paycheck and not think about the consequences. But it totally sucks when you look at how much you spent if you didn’t plan for the purchases that you’ve made on impulse.
By having multiple savings accounts, this will change. You’ll know what money you can spend, and what you need for the rest of the year.
And for even more ease, set up automatic transfers. This way when it comes time to payday, all your money gets divided up into its appropriate account.
When I say all my paycheck is used up, it’s not going all to my credit card, it’s just dispersed in 6 accounts, some on credit card for my monthly recurring purchases and cash is taken out for my weekly routine spending.
By having these 5-6 savings accounts you’ll see a change in your savings and spending. You won’t have unexpected bills to pay and you’ll be on top of your money as opposed to scrambling to pay your high bills.
You might have different key bank accounts that are important to you, let me know what yours are below in the comments area.