The 7 bank accounts your family should have…UPDATED!

The 7 bank accounts every family should have to keep budgets and your finances in check! Don't be overwhelmed, and let things spiral... I can help! www.BudgetBootCamp.com

I'm sure many of you have heard of or read my original “The 7 Bank Accounts Every Family Should Have” post.  It was from a LONG time ago and was in need of some updating, and when I launched our new site, it messed up the formatting. Here is the newest version, perfect for our Focus on Finances month-long challenge. Enjoy!bank account

Most of us have two accounts – one saving, one checking. Have you ever considered opening MORE accounts to help you organize your money better? If not, then you should! For my husband and I this is one of the single easiest things we did to get us out of our scary financial situation…and fast. And no, you don't have to have lots of money to do it. In fact, we were living paycheck-to-paycheck at the time and were in the red most months.
 
This post all started because I did it in a live TV Segment (watch that HERE), and it went viral since then (it was even featured on LifeHacker)! I hope you are able to find a way to make this system or a similar system work for your family. If it helps even a fraction of how much it's helped my family, I am happy for you in advance :). Without further adieu, introduce to you…

The 7 Bank Accounts Your Family Should Have

When you file your important papers, you keep them all in the same filing cabinet. But are they in a big pile inside the cabinet? No, they are in multiple filing folders to compartmentalize, organize, and help you keep track of things you need.

So if your papers aren't tossed into one big drawer, why would you toss all your money into one big bank account?

Most families have one savings account and one checking account. This is has been the norm since dinosaurs roamed the earth. While it works well for many, I challenge that having only one or two bank account can make it harder to keep track of your money. The fact is, MOST families statistically have trouble making and keeping a budget. This tells us that the system might just not work that well!
Thus, I'm going to propose 7 bank accounts your family should consider opening that will help you organize your money and save your family thousands.

Here is an updated video summarizing the 7 accounts and answering all your questions about them!

 

 Additionally, here is the TV segment I did originally introducing the 7 bank accounts concept years ago if you want to check that out as well:

Watch the summarized video online HERE or click and watch below:

First things first…the biggest question I get is “Doesn't having lots of accounts hurt my credit, cost me extra, and make life more complicated for me?” Simple answer…no. Or, it shouldn't, anyway. It won't hurt your credit unless you get into debt or don't pay your bills on time. And believe it or not, as confusing as it looks on paper, if you commit to the system, get organized, and take the time to do it right, it will actually simplify your life! If it costs you money to open an account, CHANGE BANKS. In fact, many banks will pay you to open an account with them! So don't be afraid to change banks. It won't hurt the bank's feelings, I promise.
Before I break down the 7 accounts in detail, first a probing question…

How do you track 7 different accounts?

If all of your accounts are with the same bank (most of our accounts are with Chase in our family) then your online bank dashboard will have all your accounts handy in one place.
If your accounts are all open with different banks, you can use Mint.com which is a free service that pulls information from all your banks and presents them on a single dashboard. They have a fantastic mobile app that my husband loves more than bacon some days. You can even pay bills from Mint. All in all, if you're willing to use a computer and phone to do your banking rather than a pen-and-paper, this method will save you time AND money.
Now, here's a further breakdown of the 7 accounts highlighted in the video:
vault

1. Family EMERGENCY savings:

Purpose:

As a rule, 20% of your income should automatically go into savings each month, and this is the ultimate account for your savings. As a rule, this account is for absolute, dire “we are going to lose our house next week if we don't do something” emergencies. Picture it as the fireproof apocalyptic vault hiding behind concrete walls in your basement, or the piggy bank you have to shatter to open. You should never touch this account unless it is your absolute last resort! And it should never be for anything that can be resolved in other ways, including paying off debt. Having 6-12 months to live off of is more important than any credit card payment you could ever make! Hopefully you will never have to touch this account…but good thing you have it if you ever do.

Rules and tips:

  • Savings money should be automatically withdrawn from your paycheck every month (20% ideally) and deposited into this account. You should pretend that this money doesn't exist when considering your income/budgets.
  • It needs to be an “out of sight, out of mind” account. Don't even bring it up when calculating your money as a family, and NEVER consider it as an option for pulling money out of when needing to pay for something…unless it's a literal life-or-death situation.
  • You can open this in any savings account, but I recommend opening this account through and online bank like ING or E*Trade (HERE are lots of great options) because it's harder to withdraw money from, and is easier to keep “out of sight”.
    • Note *It certainly doesn't HAVE to be ING or E*Trade (in fact, there could be better options out there now, we've had those accounts for years). Just pick a bank outside your regular bank so that the account doesn't pull up every time you log in to your regular bank. You really don't want to be tempted to touch the money in it. EVER.

How much to have in this account:

  • You should have enough to live on for 6-12 months (12 is your goal, don't stop until you hit at least 6).
  • You should aim to put 20% of your earnings into savings every month. When starting out, put 10% into this emergency account, and 10% into your family regular savings account (see next) until that account is built up to 3 months living…then go back to putting all 20% into this account.
  • Ideally you would never stop depositing 20% of your income into this account, unless you were to lose your job and needed that % to live off of.

By having a Family Emergency Savings account that A) you automatically draft money to each month, and B) you NEVER pull money out of, you can effortlessly protect your family from the worst-of-the-worst circumstances.

Money

2. Family REGULAR savings:

Purpose:

Note: This is updated since the original post!! So yes, this is now conflicting with the TV segment video slightly 🙂
This is your “holding tank” account; the savings account that you can tap into when needed. This account is used told hold 3 months worth of cash to live off of at all times in case of a short-term emergency. It's mainly used to hold money you are using to save up for something pre-planned (down payment on a house, new bedroom furniture, major home repairs, family vacation, new car, upcoming wedding, etc.), and to pay for unexpected expenses and emergencies (car repairs, new tires, unexpected home repair, etc.).

Rules and tips:

  • Automatically draft 10% from your paychecks to this account every month until the 3 months of cash is saved up, with the other 10% going to your Family Emergency Savings (above).
  • Once 3 months of cash is reached, no more automatic deposits from your paycheck into this account – only deposit leftover money at the end of the month. If you need more money in this account, you're going to have to cut back on your spending throughout the month! You never want to stop depositing the 20% into your emergency savings unless it's an emergency.
  • This savings account can be at your normal bank. Try to find a bank that will pay you to open a savings account! You can get paid as much as $75-$150+, just read the fine print and make sure there are no hidden fees.
  • You need to have a plan for the money in this account! Don't get in the habit of pulling money out of this account regularly – it needs to be for big purchases that require advance planning, or emergencies only.

How much to have in this account:

  • Since this is the account used to save up for big expenses, so the total amount in this account will ebb and flow. However…
  • As a rule, always keep a balance of  3 months living expenses in this account, so you can live off of it if needed for a short time before having to tap into your emergency savings.
  • When using this account to pay for a big purchase, make sure to save up the full amount before buying.

Ex: Let's say I have $15,000 in the Family Regular Savings, which is 3 months to live off of (let's say – for easy math). Then, let's say we are anticipating needing $2,500 for a down payment on a car soon. We will need to be patient and save up the full $2,500 BEFORE putting a down-payment down, so that $15,000 remains in there as a constant balance. Remember, you need that $15,000 for emergencies – whether it's to protect you in case you lose your job, or someone needs emergency surgery that insurance won't cover. Don't spend that safety net!

By having a Family Regular Savings account you have a “holding tank” delegated to help you save up for anticipated expenses, and help you pay for unexpected expenses, and protect your family in case you need to live off of savings for a short time.
budget

3. Family checking:

Purpose:

This is your “home base” account; the account where all paychecks/sources of income go initially. Your money starts here, then is transferred and allocated to other accounts. This is where you pay for minor car/home repairs, oil changes, utilities and all other bills (except for medical bills, more about this below), tithing/donations, and other “family” expenses.

Rules and tips:

  • All bills are paid from this account, preferably on auto-pay when possible to avoid late fees.
  • Money shouldn't stay for long in this account, because it will be divided up and allocated to other accounts shortly after depositing your paycheck.
  • Set up auto-transfers to other accounts to streamline the process of sending your money where it needs to go.
  • Once all your money has been deposited to this account and sent to where it needs to go, it will be easy to see if you have money leftover at the end of the month! Big pat on the back for leftover, un-spent money! Any money leftover in this account should go to Family Regular Savings. If you have 3 months living saved up in that account, have no debt, and don't need to save up for a big expense, then put half of the leftover money into your Slush Fund (below) to save up for something really fun! (and the other half into your Family Regular Savings).

How much to have in this account:

  • Enough to cover your expenses for the month, trying not to have much excess leftover. Any excess money needs to go to debt FIRST, then back to your savings accounts once your debt is paid off. If it sits in your checking account, you will most likely spend it!
  • But make sure you have enough in your account that you don't ever overdraw. The best way to figure out how much you need is to look at your spending habits from the last 6 months. Total up how much you spent every month, minus major emergencies (because that would come from your Family REGULAR Savings – see above). Average it out and start from there. See how to easily track your monthly budget and find good budget parameters HERE.
  • Be sure to keep your bank's required minimum amount in this account at all times. Read the fine-print with your bank to make sure you don't get slapped with any fees for not keeping a certain minimum amount in that account.

By having a Family Checking Account as your “home base” account, it makes it easy to send your money to their individual “jobs” (aka other accounts), and makes it simple to see how much money you have leftover (or how much you are short) at the end of the month!

female-sign

4. Wife's checking:

Purpose:

Wives, I'm talking to you!
Your monthly budget drafts from the Family Checking Account (see above) to this account every month. The money you spend for the month however you see fit. Whether you use cash, debit card, or credit card, it all comes out of this account. It makes it easy to keep track of your budget, will make it hard to over-spend, and will allow you the autonomy to use your own methods for budgeting and spending for your family, and will give you a place to keep your own “fun money”!

Rules and Tips:

  • You should use this money to cover your budgeted expenses for the month, which needs to be determined in advance by each individual family. (See tips on this HERE).
  • Sit down and write out every single thing you spend money on, then divide up responsibilities! If you do the cooking, you should buy the groceries so you know what you need. If your husband is the car genius, he should be in charge of paying for car repairs. Whatever you're good at and handle regularly, that's what you should be in charge of. No, not in a sexist way, it's not about that – at all. It's simply for your family's budgeting purposes so you know exactly who is in charge of paying for what each month! Again, decide what works for your individual family based on the things you do regularly for your family anyway.
  • Once the money has been deposited into the your account, you spend the money however you see fit, ensuring you cover all of your responsibilities.
  • If you run out of money before the end of the month because of poor budgeting, you need to tighten up and go without until your budget starts over the next month. If you run out consistently, consider revamping the budget slightly to give sufficient money to cover all budgeted expenses reasonably…but dig deep to see if it's spending habits or budget amount that are the real problem.
  • If you have leftover money, rather than spend it you should contribute to your Slush Fund (see below)! Trust me, you'll be happy you did.
  • The money for this account should NOT include “family” expenses such as utility bills, home and car repairs, medical expenses, and large expenses like braces, new furniture, etc. These expenses should be put on auto-pay from the Family Checking account, should come out of the Family REGULAR savings when needed, or from the medical HSA account (see below).
  • The money you spend for the month – whether you use cash, debit card, or credit card – all comes out of this account. If you pay for things with a credit card, pay off the card using the money from this account BEFORE you're slapped with any interest fees. If you use cash, divide your budget up weekly (rather than monthly) and pull out exactly what you need each week to pace yourself. See more on this HERE.
  • Whatever is left over is your fun money! This rewards you for being frugal. So you can decide…”Sure, a $5 pizza would be easy for dinner tonight…but if I save that $10 and cook at home instead, I could go buy a scarf from TJ Maxx instead!” Gives you the freedom to choose 🙂

How much to have in this account:

  • This ultimately depends on your individual family situation! But in general, just enough to cover your financial responsibilities for the month.

A few guidelines for forming this budget:

  • A good guide for grocery budget should be $100 per family member, per month. This includes food, toiletries, baby needs, pet needs…basically anything you could find at a typical neighborhood grocery store. I use Deals To Meals to help cut my grocery bill in half by finding what's on sale and price-matching it. See how I grocery shop for complete details.
  • For everything else (I call this “other”)…and remember that this does NOT include utilities or bills… add up what you've spent money on for the last 3 months that would apply within the bounds of your spending responsibility, divide it by 3 to find the average, then knock it down by at least 25%-50%…because we usually spend more than we need to.

 

male-gender-sign

 

5. Husband's checking:

Purpose:

Same as wife checking. This is the account you use to pay for your budgeted monthly expenses.

Rules and Tips:

  • The same rules apply as with the “Wife Checking” account.

How much to have in this account:

  • The same rules apply as with the “Wife Checking” account.
By having Husband Checking and Wife Checking accounts this gives each parent autonomy to spend however they see fit while still being held accountable for the overall budget amount. It motivates them to be frugal where possible, helps allocate spending responsibilities for a family, and makes “who is in charge of what” clear and concise…which leads to less fights about money!

 

credit cards

6. HSA (Health Savings Account):

*NOTE: Things are changing DAILY with health insurance. This post was originally posted years ago and very well could be outdated! So do your do diligence and make sure to stay current, for it is next to impossible for me to go back and update every post of mine as things change. Here is a helpful link: http://www.irs.gov/publications/p969/index.html. Thanks!

Purpose:

This is technically a savings account, but I lumped it down here with the checking accounts because you are given a debit card for this account. An HSA is a tax-free savings account built specifically to hold money to pay for any kind of medically-related expense, large or small. Basically it's like a normal savings account with a debit card and everything. Except this debit card can only be used at pharmacies, Dr's offices, chiropractor's office, hospitals, and other approved medical facilities. It's a perfect way to set money aside for medical costs so it doesn't eat into your savings, and doesn't have to come out of your wife/husband budgets.

Rules and Tips:

  • HSA's work best with more affordable, high-deductible accounts. With lower-deductible accounts, most of your money is going to a premium each month. You pay it, whether you use it that month or not. With a high-deductible plan, you pay for only what you use and still gives you protection for catastrophic events.
  • You get an HSA debit card to be used to pay for every medical expense (and only medical expenses). It's used for anything from a doctor's office co-pay or prescription from a pharmacy, to having a baby or paying off surgery.
  • Why use an HSA instead of a standard savings account? Any money deposited into an HSA is tax-free. For those who need a few thousand dollars a year (or more) to cover their family medical costs, this tax savings can be substantial.
 See what healthcare.utah.edu has to say:
  • “An HSA is all yours. Whatever you don’t spend stays there from year to year, earning interest tax-free. It’s yours even if you change jobs; and once you reach age 65, your HSA turns into a retirement account.
  • HSAs are available through banks, credit unions and insurance companies. Many employers now offer HSAs, as well. You may enroll in an HSA is you have an HDHP and no other health insurance. If you are enrolled in Medicare, you cannot contribute to an HSA, the Treasury Department says.
  • If you change jobs, your HSA goes with you. The money in your account earns tax-free interest, just like an IRA.
  • Young people in good health may benefit the most from an HSA, because they tend to have lower medical bills, and over many years the accumulated savings can be significant. Also, if you lose your job or are laid off and are collecting unemployment insurance, you can use your HSA funds to pay for routine health expenses and health insurance premiums, tax-free.
  •  People who have lots of doctor office visits, such as families with small children or people with chronic health problems, often pay more out of pocket through an HSA than through a health maintenance organization.(healthcare.utah.edu)”
  • MAKE SURE to read the fine-print. Some HSA's are “use it or lose it” accounts, or have fees attached. Both of these things are unnecessary.

How much to have in this account:

  • You should have enough to cover all perceived medical expenses for your family for the year, without depositing too much extra. Obviously this will vary from family to family. Look at your medical bills for the last year (or even two!) and use that as a place to start. Deposit what you can afford each month. For my family, we have $400/month automatically withdrawn from my husband's paycheck and put automatically into our HSA…in addition to setting money aside in our Family Emergency Savings and Family Regular Savings.
  • For my family, we deposit $400/mo into this account and we consider this as port of our 20% savings.

By having a Health Savings Account it will keep family savings accounts full and organized, and ensures sufficient funds to pay for medical expenses. It prevents having to dip into the Family Regular Savings account to pay off medical bills, and is a great solution for affordable healthcare. It helps you plan and prepare for expected and unexpected medical expenses, allows you to only pay for the healthcare you use and need, all while giving you tax-free savings.

vacation

7. “Slush Fund”:

Purpose:

Optional 7th account. Think of this as your spare change jar. This is the account where all extras go. At the end of the month your debt bills are paid, your 20% has gone into savings, all accounts are accounted for, and you still have extra!
Toss it in here, and this is your 100%FUN MONEY account! This money does NOT go toward bills or mundane things in any way. Once your debt is paid off, and your savings is under control, this account is your reward for spending wisely. Picture the movie “Up”. They had their Paradise Falls savings jar that they threw their spare change in for years.
paradise-falls-jar
But they kept having to break the jar open to pay for emergencies and other things that kept them from ever going to Paradise Falls. Don't let this happen to you! Keep other jars for emergencies, and keep your “fun money” jar for just that…fun money.

Rules and Tips:

  • You need a plan for this money. It could be for a new TV, vacation, a trampoline, or something else fun that your budget might not allow for otherwise.

Example: For my family, we want to go to the 2016 Olympics in Brazil but we are working on building up our Family Emergency Savings right now, thus, we don't have any extra cash to start saving for the vacation. Spare money here and there goes into our Slush Fund (extra birthday money, leftover budget, etc.). While we only have $255 in there right now, that's $255! Of spare money! Our goal is to grow that over time so when 2016 hits, our vacation is paid for.

  • Get your family involved on this goal. Have it be a community fund where any extra money gets contributed toward a common, exciting goal. Make a chart for your fridge, or put pennies in a jar to represent every dollar put in the account. Make it visual, fun, and exciting for the family.
  • Sadly, you really should only put money toward a slush fund once your debt is paid off (except your house) and have 6-12 months to live off of between your two savings accounts. But hang in there, take care of your family first, and the fun “extra” money will come soon enough!

How much to have in this account:

  • This depends on how conservative you are with your spending! This account only holds EXTRA, un-spent funds, so the less you spend throughout the month, the more you will have in this account.
  • This account may build up very slowly. It may be as simple as $10 leftover in a grocery budget from the week, or $100 of a tax return that wasn't needed for other accounts, or leftover birthday money that a child wants to contribute. Think of it as your spare change jar that sits in your laundry room. Instead of throwing your ‘spare change' in a jar, throw it in this account!
  • Setting a goal for this money is key, so it doesn't burn a hole in your pocket too early!
By having a Slush Fund Account this encourages a united excitement for spending wisely as a family. It gives everyone a common goal to work for, and allows for a family to spend money on something 100% fun that they might not be able to spend money on otherwise. It encourages saving, budgeting, and delayed gratification.
Technically, the list could go on to 8 and beyond. But since it depends on how many kids this next one has, I will leave this as “additional accounts”…

8+. Kids' Savings and Checking accounts.

For every child you have, I propose opening up their own checking account, and savings account. From day-one you could be drafting a few dollars a year (or however much you can spare) into their savings account, helping them to save up for college, their future wedding, a religious mission, etc. It's also a great place to deposit their birthday money into it when they're too young to really use or care for money yet.
Once they are old enough to make their own money (allowance, work, babysitting…) you should encourage them to put at least 1/2 into savings, and to manage the rest into a checking account. Teach them to write checks, use a debit card, the whole 9 yards! Yes, even an 8 year old can understand these concepts if you teach them well enough.
Start your kids off on the right foot; being financially wise, secure, and comfortable with finances in the real world.

So, there you go!

Rather than tossing all of your money in to one savings and one checking account, try opening these 7 (or 8 or 9 or 10…) accounts. It may be just the step your family needs to get your budgeting and spending on-track! Let me know how this works for you, I love getting your feedback 🙂

Check out even MORE budgeting tips below:

Beginner’s Guide

 

Where do I even start with budgeting??

 

Simplest Budgeting Method EVER! + FREE printables! (Updated, new, and improved!)

 

WHILE YOU'RE HERE…
Don't forget about my Secret Sauce online budgeting program, Budget Boot Camp! Super fun video program that makes money easy to understand. All you need is a screen and you're set!

And don't forget, if you don't save at LEAST what you paid for the program, I'll refund every dime. You've got nothing to lose! Use the code FCFBLOG to get an extra 10% off, because I love you 😉

Comments

  1. When you open all seven accounts and transfer only enough for each month, are you taking the accounts down to $0 each month or do you always keep a cushion amount in each budgeted account? Also, have health savings accounts changed with the affordable care act? Are they used in addition to health insurance or in place of? Thanks so much for your blog! I have just started reading and am trying to implement your ideas to help my family get out of the red this year after a difficult year last year. We own a small business and our income varies greatly week to week.

  2. Under the 2nd bank account when you are talking about the example of buying a car is it supposed to be $12,000 or $15,000 or am I just not understanding it right?

  3. I am new to your website but can attest to the convenience of having multiple accounts. It all started for me when I became the payee for someone who was receiving SS benefits but unable to manage money. I was able to set up automatic deposit and debits for all the major bills. This insured that everything vital was paid on time, every time. Proving where the money was spent (required yearly by SS) is also a snap. I hardly ever have to do anything for this account.
    These days my husband and I have 6 accounts to divide & conquer. Also I am super quick to open a new account when tracking expenditures is crucial. For instance when we sold a house in NJ, bought a house in CA and needed to track moving expenses I set up an account. All transactions were documented in one place that could be managed (online) on either coast (and the in between when we drove). I have also set up accounts for lesser reasons–like one just for the new central AC unit. The AC money is in a checking account ( but we financed at 0%), automatic payments each month until the promotion is over. This gave us a $50 new account bonus.

  4. I just went to the Lifehacker site and they mentioned a feeder account. Are you familiar with this? Can you expound on this?

  5. If you auto-draft from your regular checking to these other accounts, does it not count as a “transfer” of funds (Regulation D) so you don’t get nailed with the fee if you transfer more than 6 times a month?

      • After doing more research I have found that the 6 month transfer rule is for savings accounts and not checking. It doesn’t depend on the bank–it’s federal law. I hope I’m reading the law right in interpreting that I am ok to transfer out of a checking account with no limit!!

        • Thanks for looking! Yes, I would be surprised if there were fees involved with checking. We make A MILLION transfers each month, no fees. Let me know how it works for you!

  6. Chase is our bank as well. Our savings account however, will charge a fee for transfer over 6 withdrawls in a month–but never for a transfer deposit. But hey–it is a savings account; we only transfer out once/month at most,

  7. I am really liking the way you’ve decided to divide up your bank accounts. This is a concept I’ve been practicing for some time, but I think I’m going to re-configure my current system to take some of your ideas into account.

    One bank account I’ve created and found useful is a savings account that I call “Non-Monthly Expenses”. I take any bill/fee that I pay on a non-monthly basis (property taxes, car renewals, membership fees, subscriptions, etc.), break it down into a monthly amount, add them all up and deposit it into this account. It helps me in two ways, first, it forces me to keep a current accounting of all of these types of bills. Second, it helps me turn everything into a monthly bill that I’m accounting for in my monthly budgeting.

  8. Can you explain when starting out with this concept. How do you start paying your bills, for example I would like to start this right away, but it is towards the end of the month and our mortgage is due on the 1st. If I pay the mortgage out of the “bill account” on the 1st, then I will not have money for the rest of the month to separate into other accounts to pay the mortgage on the st of the following month. Or am I missing something?

  9. As newlyweds, last year my husband and I did the Dave Ramsey Financial Peace University class. We were so on fire for it and we cut down our spending and saved so much in our savings. We even sold my husbands beloved motorcycle! A year later, I am shocked and appalled at our spending behaviors. It is like we never took the class! Even though I have read every budgeting/finance post on your site, I am re-reading them all this weekend and getting us back on track. I can’t believe how irresponsible we have been, but there is no time like the present to make changes! Thank you soooo much for sharing all your tips!

    • Danielle – we’ve all been there! It’s a never-ending journey, much like weight-loss. Just because you lose the weight doesn’t mean your “journey” is done…the maintenance can sometimes be the hardest! but just know that we are ALL in the same boat, and it’s never too late! So good for you, thanks for reading, and keep it up – you’ll be just fine! XOXO

  10. My husband and I want to try this out, but I am wondering: do you use a separate debit card for each account? If so how do you keep track of them all. Can you expound on how you use it daily when you are actually paying for something?
    Also, will you be doing more date nights? I think we would be interested in one if you are!

  11. My husband and I are interested in giving this a go this year and see how it works for us. I just have one question: do you have a separate debit card for each account? If so, how do you keep track of all of them? If not, how do you actually spend money out of each account and track it?
    Also, will you be doing any more date nights? I think we would be interested in one if you are!

    • Great question! Technically we do have 3 debit cards (family checking, Bubba’s checking, and my checking) but we do all our spending on 2 credit cards (one for family expenses + Bubba’s expenses, and the costco Amex for my expenses). I only carry one debit card in my wallet, which is the debit card for my personal checking account. Can’t tell you the last time I used it though, but that’s just me! The only account you would need to worry about carrying around a debit card for would be your checking account, and the family checking account. You shouldn’t really need to pull money from anywhere else on a regular basis. Hope that helps!

  12. I just wanted to let you know that your links to healthcare.utah.edu just opens a screen on the U of U website, but it doesn’t have any info on HSAs. A better link would be this one on the IRS website:

    http://www.irs.gov/publications/p969/index.html

    Also, your information about HSAs is a little bit misleading. Per the IRS, the use of an HSA is ONLY allowed with a High Deductible Health Plan (HDHP) not “works best with an HDHP” as your blog suggests. There are other “Tax Favored” accounts such as a Flexible Spending Account that may be used if someone does not have an HDHP, but they can only roll over $500 from one year to the next and the amounts can’t be invested. For someone who is self-employed or whose employer does not provide health insurance, an HSA combined with a HDHP is a good option. However, for others like myself, where my husband has good health insurance provided by his employer, we are not allowed to use an HSA, we have to use a Flexible Spending Account instead which has different rules than the HSA. It is not portable and has lower contribution limits as well as several other differences.

    I just wanted you to know that the information you are presenting about HSAs is not quite accurate, you might want to edit it to sound more credible.

    I love your blog, btw. Its really helped me get control of my spending and find fun ways to live within my budget.

    Thanks!!

    • Thank you so much Valerie! As you can see, the 7 bank accounts post was originally posted years ago. Things are changing just about daily with Obamacare so I appreciate the updated links and info – I will edit that in my post now!

  13. A bit extra info for the HSA, if you have one which means you have a HDHP you can deposit a $3350 for an individual and $6650 annually for a family. That money, if deposited via your employer is not subject to FICA (a 7.65% savings) plus is tax deferred until you remove it when you are 59.5 (like a traditional IRA) but if you remove it for medical including Medicare part B it is removed tax free. Anyone with a HDHP and HSA should NOT be only putting in what they think they will spend, they should be maxing that out ASAP. The only thing you may find first is a 401k to the matches but even then, you HSA may come out ahead.
    I do wonder why you say 30% in cash savings and never mention a brokerage account or a 401k/403b or traditional/Roth IRAs. You can remove any money you have deposited in a Roth so it acts like a super emergency fund. I’m not saving 9-15 months of expenses because maxing out my tax advantage accounts. That just does not make sense.

    • Yes and no. For the checking accounts they each have their own debit card, but we never really use them (the only debit card I carry is for my own checking account). So it’s not as complicated as you think! And our banks used to be all over the place but now we are mostly at Chase. But with Mint.com it doesn’t really matter because it pulls all the info from all banks.

  14. Thank you for the information. It was an interesting read. Several years ago, I practiced the multiple bank accounts, where I held money for different purposes in Money Market Fund accounts which earned interest and which were held outside of my bank. Therefore I needed to plan to get to the facility to access the funds which allowed the funds to be retained for a period of time. I will re- examine the application of the concept going forward.

    Jennifer

  15. I love that you wrote this! For the past several years I have had several accounts and contributed to them as you described. Our paychecks go into checking and transfers are automatically made into these accounts:

    Checking -used exactly how you mentioned.

    Big Bill Fund- For large bills like property taxes, car insurance, bills paid yearly out quarterly.

    Medical-We usually have an HSA account but this year that wasn’t available to us so I am saving monthly for medical expenses.

    Emergency Fund – this keeps growing but have about 6 months savings right now.

    Charity- so I can never again say I don’t have the money to help some one or some cause.

    Travel – Because I love traveling and want to go on vacation without touching my other accounts.

    Additionally, my husband, daughter, and I get a cash allowance at the beginning of every month that we can use guilt free on whatever we want. My daughter and I tend to save for bigger items while my husband spends his as fast as he can. But he is very mindful of our family budget.

    This system has taken all the stress out of vacations, large expenses, and eliminated bickering about money!

  16. Hi. Can you explain how you did this when you were living pay check to pay check?

    Mt husband and I have cut every non-essential cost (including things like hair cuts and tv) and have recently paid off one debt, but we still have about $10-20 a month that we are in the red if we have no extra inome aside fromantic our primary employment. The only thing left to do is to really tackle our groceries. We don’t est extravagantly, so I don’t think we’ll have much extra even with that.

    Do you have any tips on using these accounts when your debt is so close to your income?

  17. I had a similar question. What would you suggest for those of us who ran into hardships and are working on paying back bills and paying off debt?

    Is your debt you’re trying to pay off part of your family budget? Because it goes with the bills? or is your splurge money turned into debt payoff until you actually have any free money to ‘splurge’ on?

    • I answer this in great detail and even help you crunch the numbers in my Budget Boot Camp program (funcheaporfree.com/BBC – use the code PERISCOPE to get 10% off if you hurry!). That’s really the best way for me to answer the question, because without knowing your full financial situation, it’s super hard to give advice! But I will say this – take every dollar you can spare and put it toward debt. If you can’t spare any, then find more ways to cut back, sell things, sell your house or your car, get a better paying job or a second job, etc. That’s the only way you’ll get out of paycheck to paycheck. But it will happen fast! We only made $32K the year we paid off $15K in CC debt. It’s totally possible. The 7 bank accounts happened slowly over time, as we were able to live less by paycheck-to-paycheck. So hang in there and it’ll start coming together, I promise!

  18. So if we are just starting this process should we put money into the savings accounts and build emergency funds or should we take every dollar we can and pay off debt? Then once the debt is paid off start contributing to the emergency fund accounts.

    • The latter! Pay off pressing debt first, THEN worry about savings – savings won’t protect you if you have debt, so wipe it out and breathe easy 🙂

  19. Jordan,

    First, let me say, I LOVE how you’ve taken a horrible money situation and turned it into a positive thing and thought others along the way 😊 Now, for my dilemma…I just recently got remarried; I have 2 teenage daughters and 2 stepchildren. While I understand the concept of spending $100 per person per family, would that apply to my stepchildren? They’re only with us one night a week and don’t really eat too much. I’m in the process of trying to put together a budget and your input on this would be greatly appreciated! Thank you 😉

    Emily Reed

    • Hey Emily! Great question. In your situation, you may have to tweak the budget a bit for it to fit your situation,….and that’s totally fine! Since they are only with you 1x per week I wouldn’t give them $100 each. It’s more like having guests staying with you 1x per week. We have people over for dinner at least 1x per week and never really increase the budget to accommodate, so maybe think of it that way? If you find that $400/month isn’t quite enough then maybe sneak in an extra $10-$15 per week but that’s about all you should need, really. Hope that helps, thanks for reading!

  20. I love your method! Just one question. Are you keeping a set amount to cover expenses in the family bills account every paycheck? For example, I get paid biweekly and have about 3500 in monthly bills. Should I be bringing the balance back up to 3500 every time I get paid, or keeping just enough to cover the next two weeks of bills?

    Thanks!

  21. I would love to print this and show it to my husband as we are going through our finances. Is there a printer friendly version of your blog posts?

  22. This might be a silly question, but do you get a debit card for most of these accounts? and how in the world do you keep up with which card is which? This is basically the cash envelope system through bank accounts, which I love, but I’m having trouble grasping how to know which account you’re spending out of when you’re at the store. Especially the home base account and wife account for me. I take care of ALL the finances, my husband literally goes to work and comes home and never spends a dime lol. So does it make sense to have a wife and home base account, or maybe just combine the two???

    • You get a card for the checking accounts, but we just keep most of them locked up at our house because the only one I MIGHT need a debit card for is my personal account, and maybe the family checking. All the rest are in a lock-box and never get used!

  23. Loving this!!! So glad I ran into your YouTube site (and thru that found your blog) online! For the years your husband was self employed (and still is) how do you handle setting aside money for taxes at the end of the year? Which account are you pulling from (or is it separate) and what percentage do you contribute to it (and with what priority over the others of savings, emergency, and debt)?

    • I would open a separate account, and average what your taxes have been, and set aside money each month for them so it doesn’t hit you so hard around tax time! My accountants take taxes out each quarter for me so I pay as I go, rather than writing a huge check once per year.

  24. Just recently found your blog and YouTube videos. You’re awesome! So inspiring and encouraging. I’m a young wife and mom and can’t wait to try some of your budgeting and grocery hacks.

    We have a little bit of cash we want to put into an account for our daughters college fund. What kind of account would you suggest for this? We obviously don’t want to spend it, and it would be awesome to put it into something that will earn money over time. We also plan to add more as our income increases. This is definitely not my area of expertise, so just looking for some ideas!

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