How opening multiple bank accounts helped me manage my money better
I’m good at a lot of things, but managing my money isn’t always one of them. My New Year’s resolution is to be more financially responsible, but the truth is, I’ve been working on it for a while. One of the most useful strategies I’ve developed is using multiple bank accounts for budgeting. Here’s why (and how) I do it and why it might work for you too.
Different bank accounts slow me down and help me see where my money is going
In the same way I use a Variety of Google accounts To do different types of work in dedicated browsers, I use a few different bank accounts to divide my money, although by “bank account” I mean some things that may not technically be bank accounts. Two are traditional, one through the bank I grew up with in my hometown and another through Chase. The other two are digital, my Venmo and Chime accounts. I have an app, a debit card and, most importantly, a plan for all four.
For my regular paychecks, I have chosen to have my withdrawals distributed at a 70/30 ratio between the home bank account and my Chime account, although portions of both are automatically earmarked for savings as well. Money I earn with Teaching spin classes goes into Chase, as does the money I earn through personal projects or freelance work. Money in Venmo is just regular money in Venmo that I receive when someone pays me back or I occasionally – but rarely – transfer something there. “Significant” expenses like bills, groceries, and student loans are deducted directly from the account I’ve had at home since I got my first job in tenth grade. I leave the debit card in my wallet most of the time so I don’t even touch it unless it’s an emergency. The 30% of my regular salary that goes into the Chime account is spent on fun things like personal support and much more daily Dunkin’ runs. Spin class money in the Chase account is intended for boring needs like transportation and laundry. About every two weeks I check what’s left of the less serious cases, and when I feel like it, I move some of them to Venmo, which is only for frivolity, like going out. If there isn’t a lot of money in the frivolity account, I don’t go (or at least I go with a fixed budget in mind). Finally, if there’s a big expense that I’d like to pay but don’t want to decimate one account or another to do it, I move a little bit from all the accounts to Venmo.
Why this strategy works for me
“But Lindsey,” you might say, “you have the same amount of money whether it’s in four accounts or one. Why bother with all this?” Well, because I’m bad at budgeting, that’s why. If I only had a single account and opened my app on payday to see all my money in one place, I’d go a little crazy without thinking to plan ahead for needs of varying severity. When I open four accounts, see four different amounts, and have a better idea of
Some people do this with their savings and checking accounts, both of which are linked to the same bank account. That’s fine… for these people. I tried that once. It didn’t take much convincing from the devil on my shoulder to transfer the money directly from my savings to my checking account with the tap of a finger. Transferring between different institutions is not difficult, per sebut it requires a little more effort than switching between saving and checking, and that split second is enough to make me stop and reconsider my bad idea.
Other than requiring a wallet with a significant number of pockets, there aren’t really any downsides here. All of the cards except the “reputable” one are linked to my Apple Pay anyway, and the only problem with that is that I have to be more careful not to use them for purposes other than what I assigned them simply because it’s convenient. For someone who is good at budgeting and managing their money, this probably isn’t entirely necessary, but if you read even a word of this and have anything to do with me, consider it. The accounts were all easy to set up, the debit cards were all free associated with the accounts, and since implementing this strategy, I have never found myself in a situation where I didn’t have enough money to pay for the things I needed And the things I want just because I went numb for a moment on payday.
