Kate Horrell: Simplify Your Financial Life with Multiple Bank Accounts

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The following is a guest post from Kate Horrell, a Navy spouse. As part of my Military Influencers Conference (MICDC) 2019 Spouse Ticket Sponsorship, I am publishing the best guest posts I received.

One of the guest post authors will win a VIP ticket to the 2019 MIC in Washington in September plus $500 cash to cover expenses connected to the conference (airfare, hotel, food, etc.) Learn more about the Military Influencers Conference here.

While I generally recommend that folks take steps to simplify their finances, I have one strategy that seems more complicated, but makes life a lot easier for me: multiple bank accounts.

One Checking Account: Too Hard to Track!

For many years, I used one bank account for a wide variety of expenses, and I manually kept track of the many different budgets in that account. It was tedious, but it worked – I transferred a single amount into that account each paycheck, and then paid various expenses from that account.

I had a binder with separate pages for each category. I always had the money I needed, when I needed it, but it required massive amounts of time when I balanced it all each month.

Then, I realized that we had an unused checking account and two savings accounts that weren’t really doing anything. I designated them for certain budget items, and moved those portions out of the joined account and into their own accounts. (My bank even lets me rename the accounts with nicknames, which helps a lot.)

The record keeping was a lot simpler when the only thing going into or out of that account was for that budget item, and not 43 other things.

Opening Multiple Accounts Makes Life Easier

With the success of designating a few accounts, I decided to open up a few more. At this point in time, we have separate accounts for:

  • household expenses (mortgage, utilities and repairs)
  • groceries
  • car replacement and repairs
  • health care expenses
  • pets
  • travel
  • high school education expenses
  • college education expenses
  • and my husband’s season football tickets

It seems like a lot of accounts, but it is so simple. Once it is set up, there’s really nothing to do.

Each account gets an automatic transfer on payday, and anything that gets paid monthly is set up to come out of that account automatically. For irregular expenses, it’s so easy: New tires? No problem, we just pay for them out of the car repair account.

We even have a separate debit card for the grocery account, and we use that card whenever we buy groceries. I decorated it with stickers so that I can differentiate it from my other debit card, but your bank or credit union may offer a variety of designs, or I know people who just write on them with a permanent marker.

Not only have I eliminated the tedious reconciling of a complicated account, but I have a much clearer picture of what’s happening in each category. It’s harder to overspend in one category when the money is more separate.

Instead of seeing $13,000 in an account that covers all our expenses, I can visually see that I have only $24.98 in my grocery account, and that maybe today is not the day to stock up on specialty ingredients. I’m saving time and have more control over my money.

How to Implement Multiple Accounts for Yourself

Chances are, you have a spare account that isn’t being used for its full potential. Consider using that account for a small test of whether more bank accounts would help you.

You might start with your largest budget categories (usually housing, transportation, and food) or with things that you pay irregularly (annual expenses, home or vehicle maintenance, or travel.)

Most banks will let you open up multiple accounts, and give them nicknames. You can set up automatic transfers that suit your pay schedule. Then, when those expenses arrive, you’ll be ready and you will know exactly where to find the money to pay for them.

Spencer's note: I use a very similar system. I used to have a dozen accounts where I would stash my money for various expenses, but I've come to realize that most months' expenses average out to about the same, it's just the category of spending that changes.

For instance, in December the expenses are Christmas related, but in the summer it's travel related. It comes out to $2000 per month, just different categories of spending.

Since I realized that the amount doesn't vary much, just what I'm spending the money on, I simplified my life down to just a few bank accounts.

I hate budgeting, so I just practice the anti-budget where I save XX% of my income and spend the rest without worry.

Thanks to Kate for contributing this guest post for the 2019 Military Influencers Conference Spouse Scholarship!

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