How Multiple Accounts Can Help Your Financial Progress

The excitement of the New Year has come and gone, and now you’re ready to see progress on all of the awesome goals you set for the year.
The two of you do everything you’re supposed to. You agree to focus on one goal at a time, you set an amount, a deadline, and you both make “per paycheck” commitments. But as the paychecks come, you just can’t seem to find the money you promised to set aside. Or maybe unexpected cost increases (like gas/utilities) or emergencies (like car maintenance) are making that financial goal feel impossible!
It’s so important to see progress, so that you don’t give up in the middle of your goals. We may not be able to increase our income (yet!), but we can do more with what we have. We can’t stop the unexpected from happening, but we can prepare ourselves so that when it does, we can bounce back.
My husband and I organize our money using multiple accounts. Not only has it made it easier to see progress in our finances, but we can quickly recognize where we need to adjust when the unexpected happens.
Here’s what we do and how it helps.

We organize our day-to-day spending with 2 accounts: bills & “fun” money

Most couples’ day-to-day spend can be bucketed into 3 major categories: bills, necessities, and “fun.” It’s so critical to know how much you spend on each, so that you know where to cut back to feed your financial goals (read more about these spending categories).
But after doing the work to track your spending in each area, you don’t want to throw it all away by having your bills/necessities and fun money in one account.
Can you imagine always having to remember how much of your total balance is for bills/necessities and how much is for fun? It sounds tough and usually doesn’t work. We end up spending bill money on fun items, or vice versa. Of course bills and necessities will always come before fun, but the beauty in separating the two is that it becomes obvious when a bill increases. So even though you may have to cut into your fun money this month, you can better dictate how to adjust for next month (e.g. less fun stuff).

We have individual accounts, for individual spending

I can feel everyone tense up already 🙂 . A married couple with separate accounts? Call the church police! Okay, I’m dramatic. But in all seriousness, I do believe it is important to have money as individuals, because there are things you still spend on as an individual, even when you’re married. There are many who take “becoming one” very literally, but what is most important is that you are one spiritually. When it comes to money, it is more important that you are one with your financial goals, than to simply merge all of your money into one account. Unorganized money is money not doing what you need it to.
The hubby and I went the route of keeping our individual accounts. So each month the majority of our money goes toward our joint accounts (our joint bill and spending accounts are our primary accounts), but our “individual allowance” is left in our individual accounts. We’re still open and honest about our individual accounts. It’s just another way to organize our money.
If having individual accounts isn’t your thing, you can try withdrawing your personal allowance as cash and using Dave Ramsey’s envelop method. I personal find it difficult to track your spending with cash, but you have to do what works for you. Remember we’re organizing our money so that we’re not spending on what we didn’t plan to. I don’t want to overspend on myself, and have it cut into our family goals. I’m all about seeing progress on the plans that we have for our money.

We organize our savings into categories: for example, emergency and travel

Capital One has been awesome with our savings account because they allow us to have multiple categories. So although we have one account, we can contribute to our emergency fund separately from our travel fund. Similar to our bills and fun money, we do this so that we’re not, for example, traveling with our emergency money. Your categories may be different based on your goals, but separating them will make planning (and seeing progress) much easier.
To sum up my tips: know where you spend. Know where you want to spend, and organize your money in a way that will help you get there. These habits will help you see greater progress in 2015. They will also force you to plan ahead and think about those major expenses you expect throughout the year. This leaves you in a better position when emergencies arise. Remember, the goal is make it easy to see progress and to know how to adjust when the unexpected happens.