Multiple Bank Accounts Help Manage Your Money

by Tax Guy - Burlington Accountant on May 12, 2008 Print This Post Print This Post

How many chequing accounts do you have? Do you write cheques every month and the wonder how much cash you really have available? Did you accidentally bounce a cheque?

Managing our money on a daily basis can be a real challenge especially of we have a large volume of cheques, pre-authorized withdrawals, debit card purchases and ATM withdrawals every month. It gets harder and harder to flow the flow of money and some times it’s too late and you end up with some over priced fee for bouncing a cheque. Here are a couple of tips you can use to make sure you don’t run into trouble.

Use Multiple Chequing Accounts

Use one chequeing account to pay all of your regular monthly bills like your mortgage, utilities and phone bills, and loan payments. This is helpful if you write a lot of cheques to pay your bills or if your bills come out from your account automatically.

Treat the account like one of your bills and simply make a single payment to this chequeing account. Conversely, if you have your pay cheque automatically deposited to this account, you can write a cheque or transfer your “spending” money to your other chequeing account.

But only leave enough money in this account to cover your regular monthly bills.

Your second chequeing account should be your spending account. Don’t write cheques on this account. Instead only use it to withdraw cash or make debit card purchases. If you have to write a cheque and you want to use the money from your spending account, write the cheque from your bills account and transfer the money right away from your spending account. That way your cheques are always covered.

Savings Accounts For Special Purposes

If you are saving for specific short term purposes, consider setting up a savings account for each purpose. For example, if you have an emergency fund and are planning to take a vacation have one savings account for each. This will keep your special purpose funds separate and you will quickly know how much you have saved towards your goal.

Bank Fees

Always consider the cost of fees when you open additional accounts. Your spending account should have free debit card and ATM withdrawals and your bills account should have free chequeing and allow for pre-authorized debits.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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