In our household, we utilize multiple bank accounts to help us with our budget process. We have what you might call an “online envelope system”, to help us keep track of our day to day expenditures.
We have been using this technique for years now, and we LOVE it! It’s a system that is extremely easy to maintain, and it’s not very complicated at all.
Check out this video that we put together, that will help detail our process for you to understand.
1. Main Household Checking
This account is used for our main living expenses. Such as, mortgage, groceries, cell phone and utilities. Our income is directly deposited in to this account, and we operate a good bulk of our monthly budget from here.
2. Dining Out
Every month we set aside money that is dedicated strictly to eating out. It’s much easier for us to have a debit card attached to this account, to use only in the case of eating out. Whether it is ordering takeout or sitting down inside of a restaurant.
This has allowed us to stay on top of our monthly dining budget, without it affecting our main household checking account. Once the money that we budgeted for takeout food is gone for the month, then that’s it for eating out!
3. Non-Monthly Bills Account
We absolutely LOVE this account! We use this account to set money aside monthly, for any bills that are due quarterly, semi-annually or annually. Certain bills such as, car insurance, homeowners insurance, water bill, life insurance, and garbage disposal.
Each time, our car insurance payment was due every six months; it became difficult to come up with hundreds of dollars to pay the bill. So, we decided to take each bill and break it up into monthly amounts that we put away into this account. When the final bill comes due, the money is already put away to pay it.
Most insurance companies charge you a fee to set up monthly/quarterly billing. For this reason, we decided to pay the money to ourselves monthly, and keep it in a separate account.
4. Real Estate Taxes
This account is used to escrow our property taxes. Instead, of having our taxes escrowed in our monthly mortgage payment, we made the choice to pay ourselves. Each month we put money into this account, for future payment of our property taxes. Instead of the mortgage company making interest off of our money, we now make interest off of it instead!
**We do not recommend you take this approach, if you know that there may be a chance you will be unable to pay your property taxes on your own.
5. Tai’s Fun Money
Every month we budget individual “fun money” for each of us. We get to do whatever we want with this budgeted amount, without having to check in with each other. I love having a debit card for this account, so that I don’t have to carry cash all of the time. My husband is on the account with me, but it’s strictly used for my pleasing.
This account is used to put money away for vacations and trips! This account does not get funded each month. We don’t feel it’s necessary to make this a part of our monthly budget. However, we do put money aside from time to time, especially if we know there is a trip we would like to take in the future.
7. Wealth Building Account
We use this account to help build our retirement funds, pay down our mortgage, or store extra cash that we made. For example, we may buy a piece of used furniture from a thrift store, and then turn around and sell it on Craigslist to make extra money. The extra money that we make is then used to either build our retirement funds, or pay down our mortgage.
8. Child #1 Savings Account
We have savings accounts for each of our children. Any money that they may receive for Birthday’s or Christmas,is put into their own separate account with their names on it.
9. Child #2 Savings Account
Same as above
10. Child #3 Savings Account
Same as above
11. Car Fund
We don’t believe in taking out loans for vehicles. We believe in self-financing our cars. We pay ourselves a car note and place it into a savings account. That way, in the event that we need to purchase another vehicle, we have the cash to do so.
12. Household Savings Account
This account is separate from our “Emergency Fund Account”. If an appliance breaks down, or if one of our non-monthly bills is much higher than expected, then this is where we pull the money from. We always keep this account at a certain balance to cover small emergency situations.
13. Emergency Fund
This account is held at a separate bank, away from our other accounts. We don’t want easy access to this money because it is used for EMERGENCY situations only. This money is used to cover any unforeseen layoffs or any other major financial emergency situations.