Creating a budget – and sticking to it – is a huge part of saving for retirement and planning your financial future, but unfortunately it is so very often something folks have a tough time with.
Building a budget from scratch can be daunting if you do not have experience under your belt already, and then you have to find a way to create new habits (and ingrain them) that help you stick to this new financial plan for it to be effective.
Is Multiple Bank Accounts for Budgeting useful?
Thankfully, by using multiple bank accounts for budgeting you can actually streamline and simplify things significantly – all while helping you to automate a lot of your budgeting efforts along the way.
Below we highlight just a couple of the most important reasons you want to use multiple bank accounts for budgeting in the future and how to make the most of this financial trick, too.
Save for Multiple Goals at Once
One of the biggest reasons to take advantage of a couple of different bank accounts for budgeting purposes is that it makes it a lot easier to save for different financial goals simultaneously without having to worry about “stealing” money from one goal to achieve another.
Multiple accounts sort of silo your funds into different areas, each of which are designated for very specific purposes. It becomes a whole lot easier to save three month’s worth of income for emergencies, set aside cash for a down payment on a new car, or set up a vacation fund when you have bank accounts specifically dedicated to those intentions.
High Balance Accounts Get Better Protection
The FDIC insurance on every individual bank account opened is good for up to $250,000 – which certainly seems like a lot, at least until you start to get to retirement age and have set aside a lot more than that to invest or live off of later down the line.
If you have higher balances in your bank accounts you’ll want to have multiple options available to better protect your financial future. A lot of top-tier high net worth banking solutions offer different types of insurance to protect account balances above $250,000 – but it’s not a bad idea to have the federal government securing your financial future with full FDIC protection (along with the budgeting benefits you get, too).
Automation Becomes Effortless
With today’s modern banking solutions setting up multiple bank accounts for budgeting is easier than ever before. In fact, you can often set up multiple bank accounts for budgeting purposes with the same financial institution or bank – designating “mini accounts” that you have funds diverted to from your main account.
At the end of the day, this multiple bank account solution takes a lot of the guesswork and a lot of the heavy lifting out of budgeting while at the same time makes budget compliance a lot easier, too.
When you have different “buckets” of cash and savings set aside for very specific purposes the temptation to pull from different bank accounts for other reasons disappears almost completely!