5 Bank Accounts Every Household Should Have
Ok, I'm sure everyone has heard of all the different banking accounts every household needs. The problem is that it can be complicated to keep it straight and not to mention a little overwhelming.
Most households only have two accounts. One is for checking and the other is usually a saving. But you can actually open more accounts to make sure that your money is going where you need it to.
Several bloggers have used this reference, "think about your banking accounts as a file system". You wouldn't but all your paperwork in one file so there's no need to put all your money in one account.
So let's look at the Top 5 Banking Accounts Every Household Needs!!!! I use to only have three accounts until I read one of my favorite blogger's post on the subject. These are some of the accounts she mentioned and why every household needs them.
1) Family Emergency Savings
This account is used for exactly how the title reads.....EMERGENCY!!! 20% of your income goes automatically into this savings account each month. The main chunk of your savings goes into this account. You only take money out of this account for emergencies like "we're going to be homeless". This account isn't used to pay off debt or to make any big purchases. The hope is that you never have to touch this account but it's there if you do. I suggest opening a free saving account that draws interest.
Tips for this account:
- You should have 6-12 months to live off of in this account. You don't have to reach 12, but 6 months is the goal
- Money should be automatically withdrawn from your Family Checking account every month...ideally the amount is 20% but I would say no less than 10%. Out of sight out of mind!!! Act like this money doesn't exist. If you do that then you're less likely to spend it......make sense?
- You never want to stop putting money into this account unless you lose your job. The great thing about having 6 to 12 months of living expenses in this account is that you are prepared for those types of events.
2) Family Checking
Or as I like to call it your "Bill/Payroll Account". All your money comes into this account in the form of payroll or extra income. This is also the account you will use to pay any utilities, bills (not loans), home and car repairs, or any other family expenses. You will only keep enough money in this account to cover your bills and that's it. Anything that is extra after bills are paid gets put into the other accounts.
Tips for this account:
- Have bills set up for auto pay that way you can make sure that they're being paid on time. No one likes late fees!!!!!
- Once your payroll comes in and bills are paid, transfer money to your different accounts. Money shouldn't stay in this account.
- Set up auto transfers to your different accounts. This would be one of those out of sight, out of mind situations.
- Only keep enough money in this account to cover your bills and to avoid the minimum balance fees if your bank does those.
- After your money comes in and it's sent to where it needs to go, see what you have left over. Any money left over should go into your Regular Savings Account. If you have no debt and have 3 months of living expenses in this account, then put half into the Slush Fund.
3) Family Regular Savings
This savings account is something that you can use when needed. Think of it as a place to "hold your money". Ideally, you want to have at least 3 months worth of living expenses saved into this account. You will use this account for things you want to save up for like a new car, furniture, downpayment, vacation, etc. It's important to always have a purpose for this account that way when the money is saved up, you have something to look forward to.
Tips for this account:
- Try to find a bank that will pay you to open this account. Sometimes you can get paid up to $150 just for opening an account.
- Automatically draft 10% of your paycheck into this account every month. You will continue to do this until 3 months of cash is saved up, with the other 10% going to your Family Emergency Savings.
- Once the 3 months of cash is saved, don't make any more automatic deposits from your paycheck into this account. The only deposits into this account after that will be left over at the end of the month. Make sure you're still depositing into your emergency savings.
- Always have a plan for this money. Save 3 months worth of expenses on top of saving for those big purchases.
4) Loan Account
Most blogs won't tell you about this account and the reason is that this is my own personal tip. When we were trying to pay off debt, we opened a "Loan Account". This is an account that is strict to pay on your loans. As a rule, you WILL NOT be ordering checks or a debit card for this account. Having this account will ensure that you are putting money aside for your mortgage or car loan and it will help you to pay it off faster.
Tips for this account:
- Open a regular checking account that is FREE. Do not order checks or a debit card for this account.
- You will be making weekly deposits into this account so make sure to set it up for auto draft. Take your monthly loan payment and divide it by 4. That is what will be deposited into this account weekly.
- For more information on how this account works please click on the following links to a previous blog post.
5) Slush Fund / Fun Account
This last account is optional. Instead of saving your loose change you can put it into an account. What's great about this account is that it's for whatever you want!!!! If all your bills are paid and your 20% is in savings, then whatever is extra will go into this account. This is your leftover money. Think of it as a reward for all the hard work you have done.
Tips for this account:
- Have a fun plan for this account. Buy something you've always wanted or go take a family vacation. Whatever you decide to use this money for, make sure it's rewarding.
- Set a goal for this account based on how much you want to save up.
- BUT..... money only goes into this account after you've paid off any debt and you have up to 6 to 12 months worth of living expenses in your Family Emergency Savings. You can achieve this but it takes time.....YOU CAN DO IT!!!
- This account will take time to build up but you have to look at it as a reward.
THERE YOU HAVE IT!!!!!
Well, those are my Top 5 Bank Accounts Every Household Needs. Honestly, it's not hard to achieve but it does take time and discipline. I've told ya'll before that you should tell our money where to go and not have it tell you.
Start off slowly and then work your way up. There's nothing wrong with putting your money in different accounts. If you want to keep track of them all try signing up for Mint.com. It's a great website and very user-friendly.
Also, another thing to keep in mind this that having several accounts won't hurt your credit. The only thing that you have to be careful of is not overdrawing the accounts. Make sure you keep check registries and track it weekly.
*~ Cassie ~*
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