Well folks, you are looking at the proud owners of seven bank accounts. Why seven?
Well, let me explain it for you. We used to have a problem that was a never-ending cycle. And we felt like we couldn’t get out. Until, we made ourselves get out!
The never-ending cycle
First, you save money in an emergency fund. This is with the thinking that any plain emergency will be covered.
And when your car breaks down, that savings is wiped out.
You struggle to build it back up, but months later your emergency fund is finished again.
And then another “emergency” happens, like you’re house A/C going out in the middle of July (it happened to us last year, it was the absolute worst). The cycle continues for as long as you let it. We are no longer wanting to be in that cycle anymore, so we decided to go another direction.
What do we use our bank accounts for?
- Emergency fund
- Health Saving Account
- Car/Home Maintenance
- Property Taxes
So one of our accounts is obviously our checking account (one joint bank account). We use this for paying all bills and any other expenses. This is also the account that most of our budgeting is dealt with.
And then we have our emergency fund, which is only $1000. Because we are not in Dave Ramsey’s baby step 3 yet, we just went for that amount. Once we pay off our debt, we will deal with this account again. Until then, it will sit hopefully untouched for a while. Find out how we saved our emergency fund in six weeks, here!
For now, when we use the emergency fund it’ll mean that there was a job loss and we need to buy groceries. Or we didn’t have enough funding in the car/home maintenance accounts to cover what happened.
Health Savings Account
With healthcare costs these days, it is always best to have your own plan. Even if you have great health insurance (which thanks to Starbucks, we do), it is always smart to have a HSA for expenses that your insurance may not cover. You can literally use it for anything. We’ve personally used it for regular doctor visits, dentist visits, and even urgent care expenses. Healthcare isn’t cheap, and if you have a way to save for it all year long and use it when you need it, you’ll be in good shape.
We’re saving about $50 a month. This is coming automatically out of Robert’s paycheck
Remember how I was saying we used to use our emergency fund when our car broke down? And then again when our A/C broke? Well, that will never happen again. Now, when something happens we have a separate bank account for that! We plan on also using this for home updates while we get our house ready to sell in a year or two. This will also include tag renewals (every 3 years), state inspections (annually), etc. Basically, this money is to be only used for car and home purposes.
$20 a month in this account.
Every year, I’ve had to budget our property taxes when they come. Now, I know I should keep track of when we get property taxes in the mail and plan accordingly. But this mom can’t keep that kind of stuff straight. So I decided instead of trying to figure out how to save money when we didn’t have any, I made a savings account for property taxes too. This is for the house, and both of our cars.
I based the total off of last years’ taxes which meant that we need to save about $10 a month in this account.
This bank account is pretty obvious but I’ll explain what it’s for anyway. This is not just a Christmas savings plan. This is to save money for gifts that will be bought year round. I’m talking birthdays, our anniversary (if we bought gifts, we decided to have adventures instead), Christmas, mother’s day/father’s day.
$50 a month goes into this bank account
Travel (Baby right now)
People who are done having kids would typically have a travel fund, with a trip in mind. Robert and I only have one son, and we’re not done having kids. So, because of this (and that we took our last vacation before paying off our debt a month ago) this is our Travel/Baby bank account.
I want to preface this with one fact: I am NOT PREGNANT. Nor are we trying to get pregnant.
I’m just a planner and being pregnant is expensive. All of the doctor appointments for you and your baby, not to mention the hospital stay can all add up quickly. Before Oliver was born, we somehow were able to keep up with the doctor payments. The hospital stay and then all of the pediatrician visits afterward (he had some problems with breastfeeding and needed a lot of weight checks) were not as easy to keep up with. And then there was saving to make up for the income lost on my maternity leave.
I don’t want to have to depend on getting a huge tax refund or be super stressed with bills while raising a newborn and a toddler. So planning financially for another baby now only made sense.
$10 a month goes into this account.
One thing that I suggest is to actually name your accounts, forget leaving them as account number 54263… whatever. If you name them what they are for like I did below, you can easily know what account you are transferring money into. Once you do that, the next step is either to manually transfer the money into each account monthly or do direct deposit for every time you get paid.
Well, that’s what we use our seven bank accounts for. What kind of bank accounts do you have, and what do you use them for?