5 Must Have Bank Accounts

As a personal finance educator and coach, I was often taken aback by the number of people who only leveraged one bank account to manage their money. At most, two-- one being a checking account and the other being a savings account.

However, after my own trial and error, I’ve found that a household needs at least 5 bank accounts to properly manage their money.

Why multiple bank accounts?

Multiple bank accounts allow you to separate your money so that you have visibility to your funds. It allows you to organize your funds in an efficient and transparent way.

This transparency is especially important for couples since money is a leading cause of divorce.

Where to Bank

Not all banks are created equal, so it’s important that you do your homework when choosing a bank. When choosing an online bank, consider the following:

• What are their fees?

• What is the minimum balance requirement?

• How easy is it to access funds?

• What interest rate do they offer?

• Are they FDIC insured?

It’s important to ask these questions so that you know that your money is in a safe place and that you can maintain and access the funds easily.

Which accounts do you need?

Though it’s perfectly okay to have move than five bank accounts, at a minimum you should have the following accounts to cover major financial areas.

1. General Checking/Bill Account

This is the main account that you will use to pay bills for your household. It’s only intended purpose is to cover your recurring bills and not to save money. This can be the account that your direct deposit is linked to and where auto payments can be made from.

1. Emergency Fund

An emergency fund is a savings account that holds 3-6 months' worth of expenses. This account should be with an online bank to take advantage of the high annual percentage yield. However, you should also have at least $1,000 readily available in a savings account with your local bank.

1. Sinking Fund(s)

A sinking fund is a savings account that has a specific purpose. For instance, you may have a sinking fund to save up for a car. You should have a sinking fund or general savings account for each of the big financial goals that you have.

1. Travel Account

If you love to travel, then having an account specifically for traveling is a must. This account simply another sinking fund, except with a checking account. You will need to use a checking account so that you can have a debit card to use while traveling. All of your trip expenses can be saved for and funded through this account.

1. Home Repair/Decor

As a homeowner, repairs are inevitable. That’s why having an account to fund these expenses makes home ownership less stressful. Set aside money into this account each pay period to cover expenses like air conditioner repair, roof leaks, and even mulch for the yard. You may not use it often, but having the money available is important.

These are just five of the many bank accounts that are necessary to easily and effectively manage your household finances. Start here and create more accounts and automation that will make managing your finances easier.

Personal finance educator & enthusiasts.