Bank accounts, how many is too many?
As per last miniblog, having a Past | Present | Future philosophy will help you enormously when portioning out your money onto your budget plate.
You might like to keep it to a Needs | Wants | Saving philosophy - whatever brings it to life for you really.
Having coordinating bank accounts is just taking it to a whole 'nother level of magic.
If you've found yourself wondering, "Which account shall I use?" at the supermarket or
"I wonder which card has got money on it?" this will work for you.
This is what I enjoy using:
1. Main Account.
Set up the relevant direct debits and let it flow in & out. It's likely you'll have little left before the next income month. This is the basis of Zero Based Budgeting.
a/ All your Past (what you owe) payments will dutifully go to pay off that instalment
b/ All your Present (recurring expenses) will dutifully move to whoever you pay
c/ All your Future payments will dutifully move into your savings & investments
d/ Create a new DD move to your second account for shared lifestyle essentials
e/ Create a new DD move to your new personal spending account.
2. Second Account - Your Needs
For daily household variables that you need, like supermarket shopping, new car tyres, dentist or optician appointments.
This is why it's important to plan for the next 6-12 months cash flow style so you can plan as best as possible for these upcoming expenses. Some months might be £500 others might be £700. Knowing this filters your money so that your third account varies accordingly.
3. Third Account - Your Wants
You can share this account if you are in a couple, so you allocate a clear budget for you both to use, or create two of these so you're independent of each other - my preference!
This is what you want to spend your money on, clothes, gym memberships, lunch with friends, cinema, parking costs when on nice shopping trips or days out - this one always gets me how damn expensive it is.
Do you put days out with the kids / family here or in your needs? What about kids clothes?
I'd say in the Needs second account. Your personal accounts are literally discretionary spending on nice things you want to have or do that is for YOU. Guiltless spending.
Now it's simple.
Is it a need or a want - that's the account you use.
You don't need to worry about direct debits coming out, or if a payment is pending or cleared because you can see clearly what you've left.
Has this been useful?
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Until next time
Love from
Lucy x
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