by Brandon Glanzer
Opinions about how to store and use your money can range from keeping it in an envelope in the freezer (to keep it safe in a fire) to turning it all into gold and locking it in your safe (to keep it safe in a fire). When it comes to handling your money and using your money, everyone has his or her own opinions. Of the many potential options for your money there is one system that stands above the rest, the "three-account approach." With this system, you will have one basic checking account, one savings account at the same bank as your checking account, and another savings account at a separate bank from the other two accounts. In the end, you will have three accounts to store and organize your money and spending habits.
Checking Account
Open a basic, free checking account at a local bank. Most people already have this account by the time they reach eighteen years of age. This type of account is simple and comes without any additional charges if you use it correctly. This is the main account that will enable you to access your money. Order paper checks and sign up for a debit card that withdraws from this checking account. Although paper checks are beginning to be used less, some businesses still only accept a personal check.
Savings Account One
The first savings account is to be opened at the same bank in which the basic, free checking account is located. This enables you to save money directly from your source of income. You are able to quickly and easily transfer money back and forth as needed between the checking account and savings account. The easy transfer from a savings account to your checking account will help you keep your checking account balance above zero and keep you from paying overdraft charges.
Savings Account Two
Once you have established your checking account and main savings account at a local bank, get in your car and drive across town to a completely different bank and open a second savings account. Do not attach this account to a checking account; do not get paper checks or a debit card to this account. You want this account to be inconvenient for you to access. Although it may sound counter-productive to have a savings account that is completely disconnected from your checking account, it is set up to benefit you.
This account should serve as a reserve account, or a last resort account, for using your money. With an account that is inconvenient to withdraw funds from, you are less likely to withdraw funds. The intention of this account is for long-term savings that is easy to access if the need arises.
Summary
Three accounts help keep your money organized, accessible, and, by choice, inaccessible. Your main checking account will enable you to spend money freely with your debit card, paper check, or cash withdrawn from an ATM. Your savings account, at the same bank as your checking account, will allow you to easily transfer money to and from the checking account for short-term savings and emergency cash withdrawals. Your savings account across town will enable you to save money for long-term simply because it is less easy to access. A savings account that is less easy to access will be visited less often and, therefore, the money in it will stay longer.
Brandon Glanzer and his wife, Carrie, spend their days in Bellingham, Washington. Brandon has a bachelor's of arts in sociology and a master's degree in education. When he is not educating young people or writing, Brandon enjoys having tea parties with his two daughters, Kaatri (4) and Maealie (2). Brandon Glanzer has recently begun to blog at moneyhandbook.blogspot.com.
