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Have you heard of people having multiple bank accounts? This is what I do to organize my money and make budgeting easier.
Do you want to organize your money better and find easier ways to budget?
Budgeting doesn’t have to be stressful or hard at all.
I found a super simple way to organize our money, make budgeting easier, and always know how much money we have.
This super simple system is setting up multiple bank accounts. Set up this system once, and you won’t have to worry about it again.
The Multiple Bank Accounts You Need to Budget Better
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Having several bank accounts has helped us organize our money and budget better. It can do the same for you!
In this post, I’ll teach you:
- How having multiple bank accounts works for us
- What bank accounts I recommend you set up
- How this system will make budgeting easier for you
Ready to get started? This is my favorite part of budgeting (weird phrase, I know!) so I’m excited to talk about this with you!
How having multiple bank accounts works for us:
When we were trying to figure our budget out, I was getting overwhelmed with trying to pay all the bills, keep enough for gas and groceries, and wasn’t sure how much to save.
Having all of our money in one account was just not working.
I mentioned to my husband that we could open a separate checking account to pay bills from. That way, we could put all the bill money aside and know bills were taken care of. So, that’s where we started.
I set up a separate checking account, and named it “Bill Pay Checking”. To know how much money to put in this account, I added up all of our bills (even annual bills like property taxes), divided by 12 (months), and added a little extra for cushion.
This is the amount we transfer to the bill pay checking account each month. And I have all of our bills set to auto draft from that account. So, I never have to worry about writing a check, buying stamps, or worrying about late fees.
This account was working out so well for us and making budgeting so much easier, that I thought why not open a couple more?
These are the multiple bank accounts we have now:
- personal checking account for gas, groceries, and everyday purchases.
- bill pay checking account that all bills draft from.
- “big savings” account that works as an emergency fund and also saving for the future (to buy more land one day)
- “saving to spend” account to save for big purchases (car, tractor, etc)
- vacation savings account – we can take a vacation when we have enough money in this account
- and a business checking account for me – a must.
Having multiple bank accounts has been a budgeting game changer. Organizing our money and dividing it out has made budgeting so much easier. We can easily see how much we have in each account and category.
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What bank accounts I recommend you set up:
Setting up multiple bank accounts is so easy. You should be able to open these accounts online or stop in your local branch.
These are the most crucial bank accounts you need to set up:
Bill Pay Checking
This is the most important account! If you only set up one of these, pick this one.Add up all your bills over the course of a year – everything from electric bills, property taxes, homeowner’s insurance, mortgage, cell phone bills…
Add everything up and add a little extra for wiggle room, then divide by 12. This is the amount you need to be transferring to your bill pay checking account each month.
You can break it down into a weekly transfer, bi-weekly transfer, or once a month – just make sure the whole amount gets put in there.
And then when it comes time for all those bills to be paid, the money is right there and ready to be used for that exact purpose.
I would also HIGHLY SUGGEST setting your bills up on auto pay and having them draft directly from this account. Of course, you still want to keep up with the bills and make sure you are being charged correctly, but this will make sure every bill gets paid on time and you don’t accrue late fees.
Related Post: 15 Ways to Save Money on Bills
Regular Checking
This account is for everything else – unless you want to take this system a step farther and create additional accounts for things like groceries or hobbies.
Separating bills from everything else will give you an easy, in-your-face, image of how much money you actually have for everything else after bills are paid. And bills get paid first. Isn’t life grand? 😉
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Big Savings/Emergency Savings
This is a savings account for emergencies or just savings for the future.
Once you figure your bills and how much you will need for groceries, gas, misc spending, etc., decide on an amount you can transfer each week or monthly to this account. You can even set up auto transfers on your online banking so you never forget!
This money should not be touched unless it’s an emergency (like arealemergency!)
We are using this account to save for land – we want to have a big farm!
Related Post:
Saving to Spend Account
If you have a large purchase you are wanting to make, start saving in this account for that. Think of this money as I’m saving to spend this on this one really big thing, like a new car, four wheeler, or a big home improvement project.
This account is you working hard to reach your goals, and not depending on loans for things you want.
We mostly use this account to save for new (to us) cars.
Related Post: How to Save Cash for a New Car
These are the most crucial of the multiple bank accounts you should have. Depending on your family, you may find it beneficial to open other bank accounts.
Here are a few other bank accounts you might consider setting up:
Spouse #1 Personal Checking
If you tend to fight about money, who spent what, etc., you might want to open a personal checking account for you and your spouse. Decide how much money you will each get each week or month to do whatever you want with.
You can use this money to buy whatever you want, and you can’t say a thing about what your spouse uses their money for.
If you don’t want separate accounts for this, you can take out a set amount of cash each week or month.
Spouse #2 Personal Checking
Vacation Savings
We started a vacation savings account when we started dreaming of our trip to Hawaii. It was so nice to have this money set aside, and we knew it’s purpose was for vacation. Having this money set aside allowed us to plan our vacation without dipping into money that was meant for other things.
If you are the type that finds it hard to spend money on fun things, this may help you because the money is literally labeled vacation. 🙂
Related Post: 4 Easy Steps to Save for a Vacation
Side Business Checking
If you have a side business, you need to set this account up ASAP. You need to easily know how much income your business is generating and what your expenses are. This money does not need to be mingled with your personal money. Of course, you can transfer money to other accounts, but you don’t want to be spending your grocery money.
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Home Improvement Checking
This account may be helpful if you have a long list of home improvement projects. We know how expensive these projects can get, after we renovated our whole house. Determine a set amount to add to this account every week/month, and work on projects as you have the money.
Kid’s Savings – for college/wedding/car
Transfer a set amount each week/month towards this account if you want to get a head start on saving for different needs/wants for your children.
Update: We are expecting our first baby next month, and just opened a savings account for her to have access to when she turns 18. We want to have $20,000 in this account for her to use for college, a wedding, or a down payment for a home. We are adding $25 a week to this account to slowly grow it.
Grocery Checking
I just buy groceries with money from our regular checking account, but if you are really wanting to do better with your grocery budget, a separate account may be helpful.
Related Post: The $300 Grocery Budget Challenge
Hobby Checking
This could be setting money aside for a costly hobby of yours, or something like family entertainment. It’s really up to you and your family what you budget for and make a priority.
Use this list of multiple bank accounts to consider how you can best organize your money to make budgeting easier.
You can look at the past 3 months of bank statements to see where your money is going to figure out what accounts would work best for you.
How the multiple bank accounts system will make budgeting easier for you:
By separating your money and organizing every dollar by category, you are telling every single dollar where to go.
Instead of keeping all of your money in one checking account and possibly one saving account, you are spreading it out to cover all your bases.
You are literally telling each dollar what it’s purpose is and how it will be spent.
At any given time, you will know how much money you have for bills, groceries, saved for a new car, or towards a vacation.
You can think of the multiple bank accounts system like the popular cash envelope system, without having to tote all the cash, change, and envelopes around. It’s also much easier to see how much you have when you look at your bank statements or online account.
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The big takeaway:
The biggest takeaway here is that you want to tell your money where to go. Managing your money and organizing your finances will be the difference between financial frustration and feeling in control of your money. And you definitely want to be in control of your money, not the other way around.
I want you to be financially successful and I want you to have a easy system for budgeting your money that actually works.
Having multiple bank accounts has worked so well for us that I just had to share it with you.
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