When I first started on my financial journey, one of the biggest problems I encountered was thinking I had more money to spend simply because there were funds in my checking account. And if you are like me, there were several times when I spent money that was allocated for something else. At that point in time, I had my rent, utilities, student loan payments, play money, hair cut money and a lot of other expenses coming out of one account. After getting fed up with this routine, I decided to shift some things around. One of the best decisions I made for my finances was creating multiple accounts for my expenses and even one for my saving goals! Let’s call this the 2+ account approach. 

So, what exactly is this 2+ account approach? It means that you create multiple accounts for the different items you either need to expense, buy, or save for. For example, I currently have a separate account with my fiancé for our joint fixed expenses such as rent, groceries, and utilities. I also have separate accounts for my emergency savings and travel savings. This approach can be applied to pretty much anything; your student loans, weekly play money, that Tidal subscription or even your phone bill. 

Although it might be tedious to actually open up multiple accounts, the 2+ account approach has three benefits:

• It keeps your finances organized. When you have a different account for your expenses and/or savings (e.g. student loan money vs play money), it gives you a clearer picture of what your money is being used for.

• It lessens the temptation of spending it. Have you heard the phrase “Out of sight, out of mind”? If the money isn’t in your main checking account, this will decrease the urge to spend the money that is allocated to something else.

• It gives you a peace of mind. If you are suppose to have a specific amount of money in an account to cover certain expenses, you won’t constantly worry if you spent too much on your extracurriculars.

Whether it’s separating your student loan money and play money or even your trip savings and car savings, everyone should be using the 2+ account approach. Also, try not to let the fear of fee-based checking accounts prevent you from starting. Ally Bank, Capital One 360 and Navy Federal all offer free checking accounts. As always, I want to hear from you! What is one thing that tempts you to spend your money? What is important to you when establishing a banking relationship?

Holding you accountable,

DWM