It can be challenging thinking through how to effectively set up your bank accounts. Do you set up multiple checking accounts? Multiple savings accounts? How do you keep track of what money is “earmarked” for travel funds vs. deep savings. Ideally, you could just keep all your funds in separate accounts, but that isn’t very practical. In this post, I’m going to lay out exactly how Rachael and I structure our bank accounts and money flow.
The Account Set Up
When Rachael and I got married, we decided to leave our current banks and join a new bank. A fresh start together. We looked at a number of different options, but ultimately went with Chase because they have tons of branches and ATMs, they give you free checks, you can deposit checks via their mobile app, and their branches were convenient to where we were living.
Rachael and I both work full time jobs and we’re working towards saving almost all of Rachael’s paycheck, while using mine to cover our monthly expenses. Because we’re trying to keep our checks separate, we actually have two checking accounts and two savings accounts. Here’s how it looks:
- Primary Checking: for monthly in and out expenses
- Rainy Day Checking: extra money and savings, birthday money, etc. to be used on fun stuff
- Short Term Savings: where money is saved for yearly expenses such as travel and other investments
- Deep Savings: where money goes to stay for a long, long time (hopefully). It helps to have this money in a separate account that you treat as “untouchable.”
And actually, we have another checking account with another bank that we use for our rental property. We wanted to keep that one completely separate. In the next section, I’ll talk about why we have the four accounts and how we transfer money between them.
The Money Flow
Every week my paycheck gets deposited directly into our Primary Checking account. This money is simply going in and going out, so we don’t worry about transferring any of this to savings.
Rachael gets paid on a bi-weekly basis. We have her checks deposited directly into the Rainy Day Checking account. From there, we have different allocations for where that money goes.
- 23% goes toward our Monthly Budget
- 46% goes to Deep Savings
- 13% goes to Travel
- 10% goes toward Paying Down the Mortgage on our rental property
- 7.5% goes toward Other Investments
- The extra 0.5% stays in the Rainy Day Checking account
Once a month, we make our transfers and pay our bills.
- We transfer Rachael’s entire paycheck into Short Term Savings.
- From there, we transfer money to Primary Checking to cover monthly expenses (Monthly Budget) and to pay extra towards the rental property mortgage (Paying Down the Mortgage).
- We leave money in Short Term Savings to pay for travel throughout the year (Travel) and for other investments (Other Investments), as they come up.
- We transfer the above Deep Savings allocation into our Deep Savings account.
- Each month, I write a check from Primary Checking to our Rental Property Checking account so that we can add that to the principal on the mortgage.
As a general rule of thumb we also like to have about $1,000 buffer in our Primary Checking account just in case our mortgage, insurance, utilities or cable get auto-deducted at weird times of the month. However, because my paycheck is weekly, this isn’t really an issue. We have a saying we like to follow which is “keeping it fun while keeping it safe”, so we’d rather have the extra buffer in there.
Having the money we’re spending and the money we’re saving going into separate accounts make it very easy to see what’s coming and going at all times. It’s also a great feeling to see the Rainy Day Checking account balance grow rapidly. Then, when we make our transfers, deep savings makes a nice jump each month.
We track every dollar we spend every single month to ensure we’re not going over our monthly budget. We’ll go into more detail about our monthly budgeting process in a future post.
How do you structure your bank accounts? Would this system work for you?