How Many Bank Accounts Do I Need?

I am a convert of using multiple bank accounts to budget. I have a savings account, a planned bills account, a property tax account, and a fun stuff account, and I’m realizing that its not enough. I am going to have to start looking at my finances more carefully and I may need more bank accounts to do it.

A few months back my expenses started to slowly increase, there was a minor electronics disaster (power surge), and things have started to devolve. I have my budget set very tight, and things beyond my control; all my friends getting married, the increasing price of gas, and more trips to the cottage), have really stuck a hole in my budget.

I saw the total of my debt increasing instead of decreasing. For the next 6 weeks I am on a big debt decreasing kick, which should set me back on track. After that I am going to try to set things a little more straight in the new year. I want to get some specific accounts setup that will control my spending.

Here is what I am planning to setup in the coming year.

1. Savings Account (Investments) - this is going to be a true investment account. For the time being I will try to contribute enough to max out the $5000 into my Tax Free Savings Account (TFSA)
2. Necessary Expenses - This will cover things like gifts, weddings (more of those coming up), household necessities and repairs, and groceries.
3. Fun Savings - This is pretty specifically to feed my electronics fetish.
4. Planned Expenses - This will cover car payments, utilities, insurance, everything that I can budget.
5. Property Taxes - I have this account since I pay property taxes twice a year instead of monthly.
6. Emergency Account - I think I want to keep this out of my normal banking an throw money in there every pay until I have $10,000 in it. This may be redundant and may just be another example of the Necessary Expenses, but at the moment it really seems separate.
7. Pension Plan - My company has a pension plan, and will match my contributions up to 4%. Of course I will be contributing to this.
8. RRSP - I maintain my own separate RRSP program outside of my company RRSP. I make minimal contributions to this, and depending on what my taxation situation looks like come the new year, I may stop this for the time being.

I am hoping that the creation of all these account will allow me to better follow my budget. For the past 8 months I have been pretty agressively paying off my mortgage, I may slow these payments while I establish some investments, and an emergency fund.

Tags: Multiple Bank Accounts