No matter how young or old you are, there is still more to learn about finances. No single personal knows everything that there is to know, nor should anyone claim to be perfect when it comes to their personal finances. Heck, I consider myself a fairly wise financial person, but I spent $4.00 on ice cream yesterday because I had a craving. Sure, I could have gone to the store and bought four times as much for the same price, but I wanted the good stuff from the ice cream shop! See, even I, a financial blogger can sometimes be irrational when it comes to personal finances. In order to better organize your (and my) financial life, it is best to create multiple accounts for different goals that we have for our money. For example, if you are currently going to college, you probably want to create a separate account for your upcoming tuition. Plus, along with this, you could save the money in a student account (find more about student accounts).
In order to set up these multiple accounts, you might assume that there might be a fee applied to each one. If you are wondering if your bank has fees attached with the number of accounts that you have open, you can easily compare bank accounts in your area by performing an online search or by picking up the phone (if you’re a little less comfortable with the Internet than most). For many banks, not only are the accounts free, but you can actually make each one of them yourself on your bank’s website.
Why the Separate Accounts?
The first question many people have is, “Why do I need all these accounts? Why not just put it in one?” This does work for some people, but for many, that growing account just becomes a temptation instead of a place to save money for various future expenses. For example, let’s say that you have only one account, but within that account, you have your emergency fund, your vacation fund, and the savings for your house painting toward the end of this year. Well, that fund has grown to about $15,000, but then you decide that you really would like a new car. You open up your account and wow, you have $15k there to spend on a car! Well, not really… $10k is supposed to be your emergency fund, $3k is for your upcoming vacation, and $2k is to paint your house in the fall. You actually have $0 to spend on a car. If you had separate accounts for each of your financial plans, then you would know that immediately and look only into your savings account that is earmarked for nothing.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.