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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.
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