Money: 5 Days to Budget Breakthrough
Need to get your money back on track? Each day this week I’m sharing one step you can take to start gaining control of your finances. Follow along, take the action steps and find your budget breakthrough! [Click here to read all the Budget Breakthrough posts.]
Day 3: Open a second account.
Today’s challenge is to open a second checking account to help you manage your money. (Really, open one. Don’t just think about it.)
You can read more here, but basically you will use this account to put money aside from each paycheck to pay upcoming bills and irregular expenses. Tranferring the money to a separate account keeps you from thinking that the money in your primary account is available for miscellaneous spending (like that cute leather purse you just saw on sale or taking the family out to dinner because you don’t want to cook 🙂 ).
Try to find a free checking account, or even better, an account that pays interest. You need to be able to transfer money between the accounts and if your second account is at a different bank than your main account a transfer usually takes 2-3 days. If you have a day of the week when you look at upcoming bills for the next week this should leave you plenty of time to transfer the money you need for the next week.
If you are not very organized in taking care of your finances you will probably want a second account at the same bank so that you can transfer the money quickly if you need it. You just have to be disciplined not to transfer any money from this second account unless you are paying for a bill or an item in one of your savings categories.
Once you open the second account, you will need a way to track your money. You can use a service like Mint.com, but I like to use this Freedom Account Spreadsheet. You can use the version with pre-printed categories or print the blank one and write in your own categories.
Whatever method you choose to use, the key is to keep track of how much money you have in each category and to determine that you will only use the money in the second account for the intended expenditures (monthly bills and savings for future irregular expenses). The spreadsheet enables you to see the balance in each category rather than simply seeing your overall account balance which reminds you that this money is for designated purposes and is not available for spending.
If you decide that this method is not for you, your challenge today is to find a way to manage your money that makes sense to you and one that you will continue with. You can read the comments on this post to get some ideas of how others manage their money.
If you are taking the challenge today, leave a comment–the more, the merrier! 🙂
If you are just joining us, click to read previous posts:
[Click here for day 4 of Budget Breakthrough!]
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I love my ING account! I use it instead of paper envelopes. You can have an account for every category on your budget. Some of my categories are birthdays, Christmas, car maintenance, home maintenance, hair & clothes. I divide each one into 52 weeks & it is taken out of my checking automatically every payday. When it’s time for gift, I have it. Envelopes were too easy for me to “borrow” from. When I need something from one of the categories, I just transfer it to my ING checking account or other bank account. It also makes the money harder to get to so it doesn’t get spent in a weak moment.
I opened up my 2nd checking account a few months ago, it’s been good so far, to save up for car insurance and larger purchases like furniture, although I just used most of it to buy a plane ticket 🙁 So, still working on actually using it for it’s intended purpose LOL
I have my 2nd checking account online through ING. I used the $76 promotion Kimberlee posted back in early July to open it and I got my $76 bonus in August. It pays interest and there are no fees (which is more than I can say for my regular checking account at Chase :-P). I already had a savings account there so it works out well….and I do NOT carry the debit card with me!
Jenifer M says
I am also doing it with a savings account.
I may eventually open another checking account.
I have always tried to have an emergency fund but I love using the spread sheet to actually give each dollar a job because before I hated even dipping into it, because I only wanted it to be for emergencies. My hubby and I would fight over what was considered an “emergency”. Well now I can look and say, “ok we have this many $$$’s for your motorcycle tire or for vacation or for home improvements”. As simple as that seems, it eliminates the “emergency” mind set I have had for so long. Makes both me and Hubs happy 🙂
I opened a second checking account a long time ago for this purpose. But I stink at the follow through. So I think I’ll work on that part.
I keep everything in savings account (earsn interest) and transfer the money over to pay bills or cover expenses when they are due. I keep a copy of the amoutn for each area/bill and update it each payday. I only keep a few dollars in the checkbook, in case my budgeted cash amount is not enough for groceries. (one of my areas is called “extra groceries).