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Week 2: Budgeting & Saving

Today’s Easy Financial Task 11: Open multiple accounts

How to Rock This Task:

  • Open separate bank accounts for deposits, bills, and savings

Today we have another video. Yay! In it I’ll share with you the three types of accounts you’ll need to complete this task.

Let’s get started…

Video link: https://www.youtube.com/watch?v=KEE_SPcsrBQ 

Separate to see:

Did you know that separating your money is a useful management tool to keep you on financial track? Having all of your money in one account can create confusion about what money is allocated for what purpose. Using different accounts for your specific financial goals is a great way to organize your money.

Wait, before reading further, commit to this task “out loud”

Today I will organize my finances by using separate bank accounts. Day 11 #LIVERICHERChallenge Click To Tweet

 

The accounts you should have are:

Deposit Account: A checking account where all of the money you make is deposited. It’s attached to your debit card.

Bills Account: A checking account where you transfer your money for bills.

Savings/Money Market Account(s): An online-only savings account(s) where you put your emergency savings and money for other savings goals. These are your Money Buckets from Day 4. You can and should have multiple Savings Accounts for different things ( ex: car, home, travel etc.)

You probably already have a Deposit Account; it’s your current checking account that you’re regularly using. If you don’t have one, go to www.magnifymoney.com and find the best bank or credit union and open one. I also suggest that you sign up for direct deposit at work. This way, the money you receive from your job(s) gets sent directly to your account.

Open your Bills Account at the same bank/credit union as your Deposit Account, because you will be transferring your bill money between the two accounts, and having them both at the same bank/credit union will make transfers super easy. Make sure that the bank has an online bill-pay option. Also, do not connect a debit card to your Bills Account, because you don’t want to accidentally (ummm, on purpose) spend your bill money when you swipe your debit card.

Open up your Savings/Money Market Account(s) (see Easy Financial Task 4 for the steps).

You might be asking : “Why do I have to open up another Savings Account?”

I believe that for each financial goal you have, you should open a free, online-only Savings Account, a Money Bucket. Having a separate account for each goal will help you to quickly identify how close you are to accomplishing each goal.

Stashing your money in an online-only Savings Account will help to stop impulse spending. It takes 2-5 business days for the money you’ve saved to be transferred from your online accounts to your regular bank account. Waiting for your money will deter you from spending it outside of your goal(s).

Your Grandma used to use the envelope system. Multiple accounts is the updated version. Some financial tools are tried and true.

One last important thing:

Now you know what goes in the 4th column, NAME OF ACCOUNT, on your Money List (Day 9’s task). I told you we’d use it. 🙂

Write down the name of the account each expense on your Money List will sit in. If it’s a bill, write BILLS in that column. If it’s savings, write down Money Bucket. If it’s spending, write Deposit Account, because that’s where you’ll leave your spending money for things like groceries, entertainment, grooming, gas for your car and other “cash expenses”.

If you have the LIVE RICHER Challenge book, put a B for BILLS, M for Money Bucket or a D for Deposit Account on the left side of the Money List template next to NAME OF EXPENSE.

Now you know exactly how much money you need to transfer to each of your new accounts each month. Just add up all of the BILLS, Money Bucket & Deposit Account line items separately. How cool is that? Budgeting just got a whooooole lot easier. *insert big smile*

How do you feel about today’s task? Share in the comments below.

Live richer,

Tiffany

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  • Dollars4Dee

    Having two checking accounts — one for bills and one for spending — at the same bank is a genius, yet simple, idea! Why I haven’t I implemented this already?! It’s too bad my current “deposit account” bank charges a monthly maintenance fee for a checking account if you don’t set up a direct deposit or have a high daily balance. I might have to switch to a credit union with no fees. Has anyone switched from a huge bank to a credit union? Has the transition been smooth? I know it depends on the banks.

    • Yes. Fees from maintenance to NSF to APRs are sooo much lower. Credit Unions are the way to go. I haven’t seen any drawbacks. My transition was just a matter of signing some paperwork. No pain at all 🙂

      • Dollars4Dee

        Thanks for your response, Agyei. I’ve been thinking about switching for a couple of years. I’ll weigh all of the pros and cons before doing so, but I definitely want to implement Tiffany’s suggestions for having separate accounts for bills and spending soon. I also love how she suggests not connecting a debit card to the bill account. All of these tips will make budgeting much easier.

        • Minah

          Hello – I just want to note that credit unions usually have credit requirements. My credit history is pretty bad so I usually get denied by credit unions. My credit has been messed up since 2008, I was a realtor at the time …does anyone have recommendations for credit unions without stringent credit requirements?! I know we will get to credit repair later on with tiffany, but I would love to have a credit union account. This challenge is awesome and is helping me get me organize my spending and savings. Thanks Tiffany!

          • shondag70@gmail.com

            Hi Minah, I just opened up a savings account at Primeway Federal Credit Union and my credit is NOT the best. I also did a secured loan to help boost my credit score over the next year. Please note the secured loan is not a hard hit to the credit bureaus because your basically loaning your money to yourself! Hope this helps!….Shonda

  • I hate banks b/c the NSF (which is bound to happen at some point) fee is $36. standard. This will undoubtedly spiral you into the negative when trying to undo the mess-especially when juggling multiple accounts. I absolutely LOVE my credit union, b/c they aren’t predatory like banks. This challenge is hard for me b/c my income is so limited. But I do have a basic checking and savings. Nothing to put in an emergency account yet, but I’m working on it. I love how Tiffany suggests not connecting a debit card to the bill money account. I’ve never thought of that. Go Tiff!

  • Sheryl Cranktheblessings Colli

    This is great. Organizing your money so that you will not get any overdrafts. I love it!!!!

  • Sheryl Cranktheblessings Colli

    Credit unions are the best. No monthly fees.

  • Shareem T.

    Awesome tip. I had the deposit, bills and savings set up already I just need additional savings accounts for emergency household, vacation and home projects. I also need to use the checking accounts I have per Tiffany’s suggestion and stick to it! Thanks Tiffany!

  • Stacey

    Ok, I actually have 2 checking accounts, one of which I rarely use (had it set for a specific purpose but that never happened). I like the idea of transferring spending money to a checking account to keep things a little separate. I plan on keeping my deposit/bill paying checking account the same, though. Sorry, its just that I’ve spent the last month getting things set up (yes, it took that long). I will be opening another savings account and have plans to start my SmartyPig goals within the next month or 2. Please know that I’m not trying to be difficult to your challenge, 2014 just really jacked up our finances and getting it back under control is taking some effort. I do find your tips very helpful and your book is next on my list on ones to buy. Any chance of you selling it through Barnes and Noble, so I can get it on my Nook??

    • No worries @disqus_cR4q3vQSzd:disqus ! Ultimately, you should choose what’s best for you.

      The book is available in physical form on Barnes & Noble online, but not for Nook.

  • Sade’

    I love the idea of separate accounts. I started this last month and it is helping to keep me and my money more organized and increased my savings. I am on my way to living richer!!

  • Tee Bee

    Hi Ladies,

    Just wanted to let you guys know that if you used the excel version of the Money List, you’ll have to add a column for the “Name of Account”. It’s on the pdf version, but not excel. I just thought I’d let you ladies know, since I was thoroughly confused for a minute.

    • I fixed it @disqus_SvcCRXkld6:disqus! Thank you for catching the error. 🙂

  • I have been avoiding opening a separate checking account to pay my bills from for about 6 months. So many excuses ran through my mind: I don’t have the extra money to do it now; it will complicate my spending log; I’ll do it tomorrow….my goodness!
    I finally opened it today..it took me about 5 minutes, and I didn’t even have to pay any money upfront. Opening up the account encouraged me to take one more look at my Money List and how my spending aligned with my goals…and what do you know?? I found an extra $200 in my budget! I figured out how to pay off one of my credit accounts, and I’m even more motivated to keep track of my spending next month.
    If you have any doubts in your mind about whether or not this challenge is changing lives…drop them! Thank you, thank you, thank you!!

  • JanFree

    Multiple accounts are the way to sustain wealth. Does Warren Buffet have one billion dollars in one account? The answer is no and I do not even know him. Although I want to break my bad habits, I must tell you that having multiple accounts has saved me from financial pitfalls in the past. I was not able to use the money for vacations or to start a business as planned but it did save my credit rating and kept me afloat for months until I paid something off. This is still not ideal because I am robbing myself of living an abundant life where I save but I also see the world. My new challenge is to only use money for its intended purposes.

  • Nadine Thomas

    So far I’ve been completing each task as suggested with no real issue but tonight’s task has me second guessing whether or not opening another checking account is necessary for me. I currently have two accounts: deposit account and a separate online savings account (which I opened during one of our tasks last week). The money that is needed to pay bills each month are always accounted for and never get used for other misc. things due to the fact that when my paychecks come in I pay bills before anything else. Then the rest of the money is separated into all other categories. So would you recommend still opening up another checking account or sticking with my old way of doing things?

    • BDS

      I am not opening another account for bills. I will now just be moving more money into savings accounts for specific purposes, whereas it was just mixed in before like a big pot of gumbo!

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  • BDS

    Hi Everyone! Still catching up on the Challenge and just doing what works for me. For example, I’m keeping my deposit account as my bills account but now I am moving out the money for my savings. So, I’m organizing and allocating and I must say, it feels good! I have to say, Thank you to Tiff because of just how aware I am becoming regarding my finances, my budgeting and my bills. It’s very sobering and scary, to say the least but it also shows you that you have much more control than you think.

    This LRC is difficult, but long overdue for me and worth it!

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  • Mrs. Sparks

    Question, if we do not complete this task today, will we miss out on another challenge that’s based on this tasks? I now have three savings account, the online one that I set up during the first week, a holiday account that I don’t touch all year and use for Christmas shopping and a winter vacation and a savings account that a certain amount is automatically or deposited every other week for emergencies. I pay my bills FIRST from my deposit checking account. Do I really need another checking account? Especially since I cannot pay all my bills online and have to mail checks.

  • Tunisia Forbey

    This is great! And it’s something I’ve been doing for years. I have my direct deposit go to 3 different banks. My play money (which now is more savings) goes directly to my credit union checking account. Total amount for bills and groceries go to a BOA checking account where there’s a savings attached. Next I have a Wells Fargo account that I direct deposit 1/2 my mortgage into every 2 wks so I can pay it directly to my mortgage payment. Since the money bucket day I now put all savings in a Cap1 360 account. I’m loving this challenge.

  • Maria Williams

    I opened my bill account and it actually felt really good. I never really thought about splitting up my accounts as suggested, but I realize that this will help track my money and allow me to save properly. Thank you so much Tiffany.

  • Glenda IwillblesstheLordatallt

    LIVE RICHER CHALLENGE Day 11: Defining Dollars…
    I HAVE A RUSH CARD…need I say more… Somebody help me…

  • Glenda IwillblesstheLordatallt

    Don’t hold back DC’s share with me your opinion about the RUSH CARD…

    • Housna

      Rush card= rush to spend it. I would get rid of it in a RUSH!

  • Nicole A. Tatum

    I do have checking, savings and other accounts (opened one for my son). I would never have thought of doing separate accounts for bills. so much pressure on the one account and the overdraft situation was serious. i do have more expenses and i’m not sure how this will work out but i’m willing to try. i appreciate this task!

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  • Tracy Stewart

    This is a really great idea. Heck everything here is so awesome. I am learning to be very wise with my money, Being able to see my money grow is such a great feeling.

  • Yuwan Harper

    I really like the idea of having seperate named savings accounts so that you can see your progress for each goal

  • summer

    Thanks for a Great tip!! I now have 3 savings and 1 checking. Let the saving begin!!

  • Stacey Jackson-Malone

    I like this idea, It makes a lot of sense , Because i have the hardest time allocating money for saving and bills all in one account . It all looks like spending money to me …lol…

  • Valerie Bridges

    Ok so I understand the reasons for the different accounts for money. What I don’t understand is how am I supposed to pay my bills from my bill account if I don’t have a debt card for the account? All of my bills are paid online by debt card and some that are recurring come out automatically like my gym, pet, car, and renters insurance. So I stop the auto payments from the deposit account, transfer the money into the bill account, then what with no debit card??? And I rarely use paper check anymore. Help???

  • Layla

    It was easy for me to open a new checking account at my current bank. And the money I deposited into it was readily available within 30 minutes. I also tweaked the names for my accounts. Since I follow the 50-30-20 budget, I used a separate account for each percentage.
    The remaining savings account I had before I started the challenge, I decided to rename “Travel” for obvious reasons lol.

  • Shernail christopher

    Opening up different accounts to separate your money is a great idea. I justed opened up some accounts on Friday for other reasons but after reading this day, it all make sense. Im so excited to get to work on splitting everything up!