How many bank accounts does your family have?

HINT: If you’re working towards creating that solid foundation to build wealth, you will definitely need more than 1. 

Multiple bank accounts are needed because each bank account serves a different purpose.  Having everything in one account can cause money chaos and could lead to coming up short when the bills are due. (This is a transparency moment from years ago here 😊) Also, one account doesn’t allow you to quickly know what is available to spend or how you are doing on your money goals. 

The exact number of accounts needed depends on your family goals and money management style.  Here are a list of bank accounts that you should consider:

Fixed Account

Also known as the HUB account is where ALL income is deposited, and bills are paid.  Money is transferred from here to the other accounts unless you have direct deposit set up for the other accounts.  This works out great because you are not accidentally spending your bill money.

Flexible Account

A flexible account is for everyday spending.  It can be for thinks like gas, groceries, eating out or miscellaneous.  I personally do a hybrid of a flexible account and cash.  I like to use cash for categories where I tend to overspend like groceries. 

Personal Account

A personal account can be set up for you and your spouse.  Typically, the personal account holds your “allowance”.  It is usually an account where you don’t have to check with your spouse to spend funds from it.

Sinking Fund Account(s)

 A sinking fund is simply saving for a future expense that is going to occur, which is slightly different than an emergency fund.  With the sinking fund you put a little aside each pay period until you reach your goal.  I currently have 5 sinking fund accounts.  Here are a few types of typical sinking funds.

• Back to School/Summer Camp
• Medical Expenses (think deductible)
• Birthday/Graduation/Wedding
• Thanksgiving/Christmas
• Repairs -home, Car
• Travel/Vacation – this account has come in so handy since I LOVE to travel.  I have it set up at Qapital and they automatically transfer funds every week without me having to do anything. (Click the link to give them a try.)  Then when it’s time for me to travel, I transfer it to my Flexible Account.

Children Savings Account

There are a couple of reasons to open a savings account for your children- saving for future expenses such as college or teaching them how to manage their money.  You should set up a separate account for each child.  Below are a few banks that offer savings accounts for children.  Do your research to find about fees and guidelines.

• PNC
• TD Bank Simple
• Capital One

Retirement Account

This is obviously preparing for the future.  You should definitely have an employer sponsored account (if they offer it) and an IRA account.

Emergency Fund Account

This is for things that are going to happen that are unexpected. The key word here is unexpected, if it is expected it then that money should be in the sinking funds account.  Ideally you want to have 9-12 months’ worth of expenses set aside in this account.  Of course, it will take some time to get it built up but the important thing is to GET STARTED. 

Ideally, you’ll want to set up these accounts at SEPARATE banks.  Yes, they should be at separate banks so you’re not tempted to “borrow” from the accounts where you are trying to save.  My sinking funds accounts are at online institutions.  It makes it a little hard to just run and get some money.  When deciding on financial institutions here are a few things you should consider:

• Are they FDIC Insured?
• Do they have Online & Mobile options?
• Do they offer Checking and Savings Accounts?
• Are there fees associated?

What bank accounts does your family have?