5 Top Reasons You Need Multiple Bank Accounts for Budgeting

multiple bank accounts for budgeting old time cash register Middle Class Dad

Wondering if multiple bank accounts for budgeting might help your family?

Having only 2 family bank accounts is the norm; I get it.  Why in the world would you need more than checking and savings?

For years my family only had a checking account and a savings account. If that’s where your family is today, my suggesting you add multiple bank accounts for budgeting might sound crazy, but hear me out!

I promise there’s a tremendous benefit to your having multiple bank accounts for budgeting!

For us, multiple bank accounts for budgeting literally mean the difference between financial success and financial disaster!

Specifically, I recommend having 5 bank accounts.

So in this post, I’ll walk you through what those 5 are and how my family handles managing multiple bank accounts with ease.

What are those multiple bank accounts for budgeting you should have?

Now I know there are posts out there telling you to use upwards of 14 different bank accounts.

Honestly, that makes me feel a little overwhelmed just reading their headlines.

So fear not; we’re not getting crazy here. If you want to add more to my recommendations go for it! Anything that helps you be more focused and intentional about managing multiple bank accounts is a good thing.

But specifically, here are the 5 budgeting bank accounts I have that you should have too.

1. CHECKING

multiple bank accounts for budgeting screen shot of bank accounts Middle Class Dad

First off, we’ll assume by default that all of you at least have a checking account.

Now I haven’t actually carried a checkbook in over a decade and don’t even have one currently but it’s still commonly referred to as a checking account.

For us, the checking account serves a few main purposes.  It’s:

  • How We Pay Our Bills – Is where we draft all our main utility and mortgage payments from (using the bank’s online payment system)
  • Where We Put our Paychecks – Our paychecks get direct deposited into automatically
  • Where We Take Out Cash From – Where we withdraw our weekly cash allotments from (more on that below)

So pretty straightforward.  It doesn’t generate much in the way of interest, but then this isn’t an investment; it’s simply a holding tank that money passes through on it’s way elsewhere.

The powerful benefits of choosing a credit union over a big bank

Credit unions being smaller, more locally focused with likely just dozens of employees rather than tens of thousands simply tend to care more about your business.

They don’t have branches around the globe and you are more than just a number to them and generally speaking they want to keep you happy.

Big Banks have a tendency to just see you impersonally and they know that if you leave, there’s another customer around the corner waiting to take your place.

Of course, there are exceptions to every rule, but I’ve banked with 2 of the big dogs and never will again.

Never reach for your debit card again! The Power of paying in cash

Now I mentioned our “cash allotments” above.

While I wholeheartedly recommend paying bills automatically from an online payment provider (ideally your credit union or bank’s system), I also strongly recommend rarely using your debit card.

Instead have a set amount of cash that you take out every 1 or 2 weeks to pay for things like:

  • Grocery shopping
  • Gas money for you and your spouse
  • Slush/spending money for you and your spouse
  • Family money for going out to eat, etc.

The reason I recommend paying these things in cash is simple; it requires you to think about, talk about and set aside that money in advance.

Once it’s gone, it’s gone until the next pay cycle.

This has a net effect of making you much more conscious about how and where you spend your cash. The end result being you scrutinize your decisions more and . . .

multiple-bank-accounts-for-budgeting-SPEND-LESS-middle-class-dad

I have a detailed post that walks you through every step of how (and why) the Cash Envelope System works best, so I highly recommend you take a moment and check that out.

2. AN EMERGENCY/RAINY DAY FUND

multiple bank accounts for budgeting black and white photo of a woman holding an umbrella in the rainMiddle Class Dad

This one is crucial for the long-term stability of your family!  A simple savings or money market account works great.

This should not be viewed as an investment; it’s there for when you truly need it so you want to be able to get at it quickly. Thus you should park it in an IRA or other investment option.

I do NOT, however, recommend just keeping the funds in your checking.

The main reason is that when it’s there and you see it every day it’s tempting to justify using it (I don’t want that new grill, I NEED it!).

Out of sight and out of mind is exactly where you want it to sit and park itself until a true emergency presents itself.

The most important reasons an emergency fund is crucial for your budgeting bank accounts:

  • If you own your home and the air conditioner breaks and needs to be replaced (usually about every 10 years and easily $4,000 or more.  Generally speaking, most homeowner’s insurance policies would cover replacement from damage to the system from some unpreventable source but not just due to age)
  • If you own your home and the roof needs to be replaced (usually about every 15 years and again can be $5,000 or more – same as the above with regards to insurance)
  • If your car gets totaled and the other party or your insurance company won’t pay to replace it
  • A medical emergency (chances are you have a high deductible and a co-pay.  Guess where that difference comes from?  That’s right; your wallet!!)

I also have a post that details much more on setting up your Emergency Fund. So take a moment and check that out if you don’t have one yet.

Want an easy and cheap way to spend less?

The app Trim automatically looks at your monthly bills & spending and then cross-checks that with savings programs almost all vendors have. When they match up, you save. They’ll even handle the hassle of canceling memberships you no longer want or renegotiate bills for you like insurance and cable bills.

Just sign up and spend on your Visa card and earn automatic savings back on your statement!

How much should go into this emergency fund? 

multiple bank accounts for budgeting close up of a portion of paper currency Middle Class Dad

The general rule is about 3-6 months of expenses according to financial guru Dave Ramsey That’s a big spread, so here’s how I recommend you do it in greater detail:

  • If you have 2 sources of primary income in your house, 3 months is probably fine
  • But if you have 1 source of primary income I would lean more towards the 6-month end (how far to lean would depend on how stable that job is.  If you’ve been employed under 2 years and/or your career/field has a tendency to change jobs every few years I would go 6 months for sure unless it’s REALLY easy to find new jobs in your field and area).
  • And if you are a freelancer or have an inconsistent income I would go with 6 months

I think you get the idea.

The greater the consistency and stability, the less you need.  Of course, I know nothing about your situation and I’m not a financial planner; I’m just telling you what works for me so this is no way should be considered financial, legal or professional advice.

How do I figure out what “household expenses” are?

In determining your expenses, bear in mind we’re talking essentials.

If you or your spouse lose a job, you’ll want to immediately cut out any unnecessary expenses such as cable TV, lawn care or house cleaning people, going out to eat, etc.   So that should leave you with:

  • Mortgage or rent
  • Utilities – electricity, gas, water, trash, etc. (I would keep the basic internet as it will help in the job search)
  • Gas money
  • Food – basic groceries (time to skip the truffle oil and high-end wines)

If you have debt, I don’t recommend you stop paying those bills, but they should be last on the priority list (car loans excepted as you can’t look for a job if your car gets repossessed) and you should just make the minimum payments on them until the income/job situation gets resolved.

I wrote a very popular post some time back on being unemployed, so if you find yourself in that boat, check it out at When you become unemployed – 5 solutions to get you moving!

So simply add all those expenses up and multiply by how many months make sense for your situation. 

For a family of 4, most likely you’re looking at a minimum of $10,000 and possibly much more if you have a high income.

How debt factors into building your emergency fund

multiple bank accounts for budgeting kid in purple socks holding a lot of $20 dollar bills Middle Class Dad

If you have debt, I would just do a starter rainy day fund for now ($1,000 or so) until you get out of debt.

Getting out of debt should be the primary goal if that’s the stage you’re at.

If you have debt and want to know how my family got out of debt, check out my post about Dave Ramsey’s Baby Steps. That is the blueprint my family used to go from being $60k in debt to living debt free!

If you are out of debt, just realize it may take time to get your rainy day fund built up and that’s OK.  How long it takes depends on how frugal you are.

6-18 months would be ideal since Murphy tends to bring those emergencies out of the blue and when we aren’t financially prepared for them that’s when our tendency is to go back into debt to get it resolved.  So keep the lifestyle low and make sure both spouses are on the same page and you’ll get there quick.

3.  A LONG-TERM SAVINGS ACCOUNT 

This is where you’ll set money aside to replace your cars down the road or similar expenses.

That isn’t an emergency since we can predict the need to replace cars around the 10-15 year mark.  There could be other expenses too that you want to plan for a year or more in advance; kitchen or bath remodel?

Adding a pool or hot tub? Spouse planning to go back to college?  You get the idea.

This too is a simple savings account and the beauty of having all these accounts in one financial institution is that you can quickly, easily and online do balance transfers from one to another.

This is often one of the most overlooked multiple bank accounts for budgeting because our society loves to just reach for the credit card or car loan for these types of expenses.  But they are easily budgeted and managed without debt with just a little planning.

How much should we save in our long-term savings?

How much you put in here each month depends on your needs.

But say you know you want to replace your spouse’s car in 2 years. You also know they want a late model Nissan Leaf. Then you simply need to look up what the going rate is for that car (looks like $8,000 to 10,000 with a quick Kelley Blue Book check).

Take the average amount (let’s go with $9,000) and factor in the additional expenses of tax, title, and license.

This will vary by state, but for our purposes, let’s assume that adds about 10%, so we’re now at $9,900.  Simply divide that by 24 and you now know that:

You need to save $412/month to buy that car in 2 years!

If that seems unattainable you should consider an older model (I looked at 3-year-old cars in my example) or you should give yourself more time.  The one thing I know for sure is you can’t get where you want to go if you don’t have a map and a plan.

Hoping for the best likely leads to pilfering from your rainy day fund or finding yourself with a car loan; neither of which help the long-term financial strength of your family’s future.

4.  A SHORT TERM SAVINGS ACCOUNT 

This one is similar to #4 except it’s for expenses you know you’ll have in the next 12 months.

Things like:

  • Vacations!
  • Minor home repair/remodels

Again, as with my car example, figure out how much you are planning to spend and by what date.

That will tell you how much you need to be saving each month.

That $3,600 trip to Disneyland next July means putting aside $450/month if you start planning in October and some vacations might require purchasing at least some things like airfare or hotel well in advance, so do the math and plan accordingly.

But either way, multiple bank accounts for budgeting is essential!

5.  A CHRISTMAS SAVINGS ACCOUNT

multiple bank accounts for budgeting glass jar labeled Presents with a lot of hundred dollar bills inside Middle Class Dad

This one is usually the least obvious but really can be the most crucial of the multiple bank accounts for budgeting.

Check out much more detail in my most loved holiday post about crucial Christmas Saving habit improvements.

How many of us wait until November and realize we have nothing saved to buy presents with?

We then scramble, cheap out, or use credit cards to save the day (and then pay for it; literally and figuratively, the whole rest of the coming year).  No; this one is really a no-brainer.

How much should we save for holiday spending?

As with the 2 savings accounts we first need to figure out how much we want to spend.

That’s a totally arbitrary number.

For my family of 4, we typically spend about $1,000 for a Christmas season (which includes sponsoring a foster child’s Santa list).

Since we know we’ll start spending that in November, we divide that $1,000 by 11. Thus we save $90/month starting in January to ensure we are never stressed out or going into debt for the holidays!

That amount may seem like a pittance for your family or it could seem like a fortune.  The amount really isn’t that important.  As I like to say . . .

Presence is More Important Than Presents.

So what I just outlined is exactly how my family does it.

Your family could be totally different or you may have additional needs I haven’t thought about.

Maybe you don’t celebrate any holidays in December and don’t need #5.

The idea is more to get you thinking about the long-term end game and not accidentally sabotaging your family’s financial future by not properly planning for things.

But to do it right, you need multiple bank accounts for budgeting.

If your family isn’t already on a monthly written budget that you map out, agree to and stick to before the month begins, I WHOLEHEARTEDLY recommend you do that.  Your household budget is your family’s road-map to financial success.

bank accounts DRIVING BLIND

I have a copy of my Budgeting Spreadsheet available at no charge.

It’s a simple, highly customizable, Excel spreadsheet and you can download it quickly and easily FOR FREE!

multiple bank accounts for budgeting Free budget spreadsheet click box Middle Class Dad


So what are my . . . 

5 Top Reasons You Need Multiple Bank Accounts for Budgeting?

1. IT KEEPS TEMPTATION IN CHECK

If all your cash is parked in your checking account you’ll be tempted every time you check your balance or see it on that ATM receipt.

Even the strongest of us get tempted to go a little crazy on spending; a nice bottle of wine or a gift for your spouse. Maybe something special for the kids? Those are all great things! Things that need to be thought out and budgeted for.

Thus having multiple bank accounts for budgeting keeps you in check.

2. THEY KEEP YOU FOCUSED

As with the above, having your money organized into multiple bank accounts for budgeting keeps you focused. I can see within 30 seconds on my phone exactly how much we have saved for Christmas so far. Ditto for our emergency fund.

When we’re organized and focused we spend less and are much more likely to hit our financial goals. Setting up our budgeting bank accounts the right way is a huge part of that.

3. YOU WILL BE LESS LIKELY TO GO OVER BUDGET

Being intentional, focused and organized with our money means you’ll be much less likely to blow it.

Things like spending more than what you had and paying huge overdraft fees or returned payment fees will be a thing of the past.

4. YOU’LL BE LESS TEMPTED TO REACH FOR THE CREDIT CARDS

Go all year until November and then trying to figure out how to pay for those Christmas or Hanukkah gifts is a recipe for disaster!

No matter what religion you celebrate, gift giving at some point throughout the year likely plays a role. Thus it’s crucial you have a budget and a plan for how to pay for that. That plan needs to start well in advance! Thus multiple bank accounts for budgeting become crucial.

Otherwise, you’ll be reaching for the credit cards and then starting the new year in a panic about all that new debt you racked up.

5. SO YOU WILL ACHIEVE YOUR DREAMS AND GOALS!

We can’t achieve our financial goals (and thus our dreams) if we’re scrambling to make ends meet.

Thus, part of your plan for success has to involve multiple bank accounts for budgeting. Think how much better your life, your marriage and your family could be if worrying about money was a thing of the past!

Want to dig in further, one of my most popular posts is about Financial Freedom and Living Your Dreams. Take a moment and check that out when you’re ready to start living yours!


Do you have questions about managing multiple bank accounts for budgeting?

In this we post, we looked at the crucial reasons you need multiple back accounts for budgeting.

The old model of just a checking and savings doesn’t really work if you really want to get ahead financially.

We also looked at the best ways of managing multiple bank accounts so it just flows naturally in your household’s budgeting process.

Are you struggling financially? How can I help?

Feel free to comment here or email me with any questions!


If you like this post on multiple bank accounts for budgeting, please follow my Budgeting board on Pinterest for more great tips from myself and top parenting experts!


multiple bank accounts for budgeting Jeff Campbell bio Middle Class Dad

Of course I have to add in that this post, like all my personal finance posts, is not intended as “financial advice”. I offer my opinions based on my experience, research and my own mistakes. Thus if you need financial advice you should seek out a professional in that area who is legally authorized to give financial advice.
Photo credits (that aren’t mine):
Rainy Woman – https://unsplash.com/@falconart
Money socks – https://www.flickr.com/photos/stevendepolo/
Presents Jar – https://www.flickr.com/photos/76657755@N04/


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