I may have too many bank accounts. Are you familiar with the envelope method?  You know, that budgeting method where you put all your cash in separate envelopes for each need?  Well I might do that with bank accounts. I have a bit of a collection.

How many bank accounts do I have?

I have two separate banks and with 6 accounts between them. This isn’t even counting my investment accounts!

I know most people only have one main bank, but having two has served me very well. The biggest advantage to having two banks is to protect yourself in case of identity theft. I’ve had my identity stolen twice, and the first time they got into my main bank account. That was a pretty awful experience, and the only thing that kept me afloat was the fact that my other bank was spared from the attack.

Why So many?

Ok, It may seem like overload, but each bank account has a very special and specific purpose. And I need all of them!  Well, I probably could consolidate, but I don’t want to!

Transactions

Ok, lets start with checking accounts. I have two of them. The first one is for all my regularly monthly transactions. This includes my direct deposit for my pay check and all of my bills. It also includes my ATM withdrawals for my weekly cash allowance. I use it the same way most normal folks use their bank accounts.

Big Purchases (and Paypal)

My other checking account is a staging area for big purchases. I know that I’m going to need to buy something big every few months or so (Currently I’m saving for a new water heater) and I need a place to store that money so I don’t spend it on other things. This is a great strategy to budget for those big expected costs.

I also use this account for Paypal for some reason. It seems like my paypal should be tied to my main transactions accounts, and while that makes the most logical sense, it’s not. The reason for this is that I initially set up my paypal for my Ebay Sellers account, and I was saving all the money I made. Therefore, it had to go to this bank in order to go into the correct savings account.

Related: A Tale of Three Vanguard Funds

Short Term Emergencies

The big known expenses have older meaner cousins. These are the big unexpected costs. It’s hard to budget for them because you don’t know exactly what, when, or how much it will be. It may be as simple as a flat tire, or as complicated as broken refrigerator (or worse!). I have a special bank account ready to go with a few thousand dollars in it for just such short-term emergencies.

Long Term Emergencies

Unfortunately, a few thousand dollars isn’t going to fix everything. That’s not really going to help much if I lose my job, or if I can’t work for some reason. Enter my long-term emergency fund. I currently have enough money in it to pay 6 whole months of living expenses or one full year of my mortgage. My goal is to get it up to 1 full year of living expenses.

Travel

We all know I love to travel. So, of course I have a separate account dedicated to that!  I put a little bit of money aside each paycheck to fund my next adventure. I usually have my trips planned out (at least in my head!) months in advance, so I know how much I’ll need. Egypt is going to run me about five thousand dollars, so I have to put up a little more each month for that. But it’s super fun to see my travel fund grow and know I’m getting closer and closer to that awesome trip!

 

FIRE Goals

This is the bank account that I’ll probably get some question marks on from my personal finance friends, but hey, I have to do me. I have one savings account that’s dedicated to all the things I want to do once I quit my job. This includes going back to school, studying Tai Chi in China, buying an RV, and all the other crazy stuff I want to do once I’m job independent. I need to save up a whole lot of money for these things, and I know a lot of my finance friends will tell me that keeping this much cash in a bank account is a terrible idea. I know, it’s not going to grow in the bank. But this money isn’t for growing. I have investments for that. This money is earmarked for specific goals, and I don’t want to risk losing it.

What do you have?

So now you all know my dirty little secret. I hoard bank accounts. Is this normal?  Does anyone else have more than 2 or 3 bank accounts?  Let me know how many you have in the comments!

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4 thoughts on “All My Bank Accounts

  1. If all those accounts work for you and you’ve actively made an informed decision to keep the cash on hand, then I don’t see an issue! If it works for you, and you’re informed, that’s all that matters.

    Just like I think everyone should know there are alternative options to the 9-5 til 65, we need to make sure the FIRE community doesn’t become a list of ‘this is what you should be doing because that’s the correct path’. Learn, be informed and decide for yourself what works for your situation.

    • Thank you! I agree, I think everyone should follow their own path for what works for them. That may be a 9 to 5 for 40 years or it may be one of thousands of ways of getting to financial independence. I just want people to know they have options.

  2. 3 banks here. I got Capital One when it was ING and interest rates were 4.5%. I dealt with the low interest rates, but when the fed started raising rates and their numbers didn’t budge, I checked out Ally. There are capital one branches near me, which is super useful, so I’m not ready to give it up. I also have a savings account for travel, and one for property taxes. My first bank has branches all over, so I’m not ready to give them up yet either. While capital one has no fees on their accounts, my first Bank insists on a minimum balance in checking, savings plus direct deposit. I guess we will see what it takes for me to pare down.
    Nice post!

    • I wish I could find a bank account that pays 4.5%! That would be amazing! I looked into Ally, and they do have the best rates, but not by enough for me to go through the hassle of switching to them haha.

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