Four Basic Bank Accounts To Consider For Budgeting
I talk a lot about money. I mean, this is the point of the blog, am I right? But I’m not sure I’ve done a deep dive into how I manage my own finances. And how I run our household. I’ve talked about it briefly, but never in depth. However, But I discovered a system that works, and I’m here to explain it to you. But don’t worry, I’ll break it up into a few posts to make sure that your eyes don’t roll out of your head in boredom. Today’s topic: your basic bank accounts.
People house their money in a lot of different ways. And you need to have a system that works for you. We currently have six bank accounts and two credit cards.
I can see your eyes bulging. Don’t worry, your banking system doesn’t have to be this complicated. I happen to know that I’m the kind of person who sees money in an account, and assumes that it’s not earmarked for something, even if I know it is. Having a million different accounts helps me make sure I don’t overspend. If money is in one bank for one purpose, I can’t spend it. Emotionally, it’s a good barrier, even though I keep all my cards in one wallet. The cards have different purposes, and I can avoid dipping into the wrong funds.
So, what funds do I have, you might ask.
The Adventure Bank Accounts
Adventures are a mainstay in our household, so we make sure to fund them in basic bank accounts online. Well, not sooo basic because we make sure our money is earning interest and cash back rewards when we spend it. How did we manage that, you ask?
We set up our Adventure Fund (my personal favorite account) in Aspiration Spend and Save (referral code, so if you sign up, I get $25 to help keep the blog running at no charge to you), which is a GREAT bank. It earns 2% interest every month in the Save account where I keep the bulk of our adventure fund to get the maximum interest, and 1% cash back on everything I spend. I generally keep around $50 in this section of the account to make sure I don’t have to play the “let’s transfer money over” game. Not a bad gig.
Their customer service is great and they’ve always answered my support emails. They have a debit card attached with the account and will cover ATM fees worldwide. I’ve been really happy with the set up overall. I also link my Paypal to this account so it’s easy for me to make sure I spend fun money on fun things and not bills (which I’ve accidentally done before this set up).f you’re not a fan of credit cards, I’d 100% recommend Aspiration as a way to earn cash back and have decent interest. It’s not a ton but it’s more than I get at my main bank.
Our Emergency Fund
If you don’t have an emergency fund, you need one. We have one, so we keep the bulk of it at a high-yield savings account. Since we’ve put our emergency fund there, we’ve gained $50 in interest, compared to measly pennies at our credit union. It’s enough to keep up (roughly) with inflation. And separating it from our day-to-day bank account keeps me from dipping in to cover “emergencies” that aren’t actually emergencies. It takes 3 to 5 business days to process a request, and that gap always makes me double guess to make sure we REALLY need it.
So far, it’s worked. We’ve only needed to use the account once since we’ve opened it. The account was technically for car maintenance, and we probably could have spaced it out to cash roll the expenses, but one and done was better timing wise. So we decided to use a credit card and then pay if off when the money transferred to our daily checking account.
As for which bank to use, personally, I love Ally Bank because they had the best rates when I signed up. But I think there are slightly higher rates at other banks currently. I’m just not going to play the bank hopping game because that’s exhausting, although it can be lucrative to chase bonuses. Just make sure that you’re getting more than 2% interest, to keep up with inflation.
Day to Day Bank Accounts
We also have a local credit union for all of my day to day banking. We could bank entirely online, but I love the face to face interaction with my credit union people. I also accept checks for my tutoring, and so it’s handy to be able to drop them off. Yes, I know. I’m totally losing my millennial card for preferring the face to face interaction instead of a banking app, but let’s be honest, I lost it when I admitted I didn’t own home internet.
We actually have several accounts opened in this bank. We have my checking account, a savings account where we store our bill money, and a small emergency fund that hovers around 1,000-2,000.
The checking account we use for groceries, gas, home maintenance. I keep the account at around $400. It’s low enough that I won’t spend lavishly, but large enough that we shouldn’t overdraft.
That said, our bills are paid out of our day-to-day banking account, and while keeping the account low helps curb unnecessary spending, a $1200 rent check would bounce. Enter: bills saving account. We split our money between checking and this account when we’re paid to make sure we have enough to pay the bills, and to make sure that we don’t spend our bill money on pizza. (I’m looking at you, Little Caesar’s).
And we keep a small emergency fund on hand for things like new tires and last minute plane rides if there’s a family emergency. It’s enough to keep my peace of mind but not too much that we miss out on the interest it could be earning.
Credit Cards
While credit cards aren’t bank accounts in the traditional sense of the word, we do leverage our money with them, so I’m writing about them here. We recently opened two credit cards, with very small limits. Combined, we can charge a whopping total of $1,300 before the banks revoke our money privileges. I’m still figuring out how we’re handling the money we use on these cards. Right now, it’s stored in a combination of The Adventure Fund, Daily Spending, and Bills. Because I use the cards for a hodgepodge of things. But we’re considering opening another account to transfer money into when we spend via the credit card. Right now, though, it’s a work in progress. But, since we’re “housing” money here, they’re worth a mention.
And there you have it, folks!
That is where we store all our money. It’s a complicated system, and during our move, I’m hoping to simplify and reorganize it. I have some ideas. And I’m hoping pay increases will give us a bit more autonomy with our money instead of every purchase being a joint one, which is has to be right now in order to fit our goals.
So, how do you organize your money? And as always, I’m more than happy to answer questions!
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I have a slew of Ally accounts for various goals (vacation, car, pet emergency fund, etc). The I have two accounts at my physical bank. I keep the bulk of my monthly money in the secondary checking account and transfer in a weekly lump sum to float me on day to day expenses. This includes almost all things that come my way unless they’re over $75 (the arbitrary amount I set figuring my weekly funds can’t stretch further than that).
It’s a bit convoluted but works for me.
LOVE IT! Convoluted finances work best for me. If it’s too simple, I rationalize myself into spending money we don’t actually have or that’s bookmarked for something else – and that’s never a good thing.
Solid post!
I’ve been using Capital One 360 (previously ING Direct) as my primary bank account since college. Capital One has generally offered good rates on the savings account and checking account. I also have a Wells Fargo bank account from high school that is convenient from time to time, plus I still have a Wells Fargo credit card.
Curious… which credit cards did you open?
Nice. I’ve heard good things about Capital One 360. I have an AmericanExpress Card and a Chase card.