Monday, January 11, 2010

How Many Accounts Do You Need

We all know that you need an Emergency account for emergencies.
We also know that you need a Savings account for sort or long term goals.
Then you need a Retirement account (IRA and/or 401k) for when you retire.

My question is how many accounts are to many accounts? How do you keep track of it all?

Is your Emergency account and your Savings account the same account or two separate accounts?

How do you fund these accounts? Is it done simultaneously or do you fully fund one then fund another?

If you want to save to buy a car do you save in your savings account or do you open a Car account?

My head is spinning, can someone simplify all of this for me?


  1. I'm new to your blog, but have you ever read Dave Ramsey's book "Total Money Makeover"? He has some great ideas on all of these questions, and how to get out of debt and stay there. Just a thought... it's changed our lives, personally.

  2. I have two banks with 2 accounts each.

    Bank 1 - Chequing...where my paycheque is deposited, I withdraw my jar money from and I pay most bills from
    - Savings ... I transfer money here to 'hold' for things like costco membership, salon, CAA, insurance etc

    Bank 2 - Chequing...I transfer money here and it pays for the boys fees etc. sports. school. music etc. Money deposited each month, so that there is enough when it is needed.
    - Savings ... I hold my savings here. RRSP, EF, Christmas, summer etc...all in one account so 'I' keep track of how much each 'category' has.

  3. Jessica had a fantastic recommendation. I read the book in 2007 and it helped me design a plan for building my financial foundation.

    I will give my thoughts on some of your questions.

    One has too many accounts when one can not properly manage accounts. I have many accounts

    - 1 @ Bank of America for operational expenses (pay bills), I do not use this for any type of shopping.
    - 1 @ ING Direct to have easy access to my savings accounts as necessary
    - 1 @ Credit Union that I use when I am traveling or have save a large sum of money that will be spending.

    - 1 @ Credit Union. I do not use this account much anymore, but it doesn't cost me anything to keep it open.
    - 3 @ ING Direct.
    --- 1) Emergency Fund which carrys $1000 balanace
    --- 2) Vaction Fund
    --- 3) Misc. Savings Fund (Christmas, Car Insurance, Life Insurance, etc)

    Every payday my check is directly deposited into my Bank of America Checking account. From there I transfer a set amount to the vacation fund and Misc. Savings Fund. If my emergency fund falls below $1000, I will refill in on paydays.

    If I need to spend money from my ING Savings account, I transfer the money I need to the checking account so that I can use the debit card for the transaction. I have not found a great way to keep track of my Misc. Savings Account.

    After writing this down, I admit that I can get rid of my Credit Union Checking and Savings. I may do this after I pay off my car loan with the bank. ING Direct is perfect for people who chose to have a different savings account for everything.

  4. Umm, I think I have 5 accounts. I know, it's a crapload, but they make sense to me, so I'll try and break them down for you.

    Credit Union: main checking account. Almost all funds go there first.

    PNC: joint checking account with boyfriend. Household funds go there, will be main checking account once married.

    ING: irregular expenses/allowance account. I have separate accounts within ING for irregular expenses, like car insurance and personal property taxes, yearly vacation to see family (I'm in VA and they're in CA), yearly prescription deductible, etc. I also have an Electric Orange account, which is where I transfer my fun money, which is my budget to spend on myself.

    Capital One MMA: Emergency funds. For genuine, all heck breaks loose emergencies. Used to replace brakes for car last year. I follow DR to an extent, so right now it has $1,000 in it, though that number will go up this year.

    Chevy Chase Bank: student loan account. I transfer money from my paycheck directly into this account, and my student loan payments are automatically debited. Nothing else goes in or out of the account. I often forget it exists.

    I know it's a crapload, but I haven't gotten overwhelmed, yet.

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  6. I have 3 accounts...

    Checking- Main Bills etc.
    Savings- 1000 Emergency Fund
    MMA- this is my savings for whatever goal- right now it's saving for a house fund.