Money management, as a social young person, is hard.
In the age of "I want it, I got it" (thanks, Ariana Grande), everyone seems to be rolling in it. Yet we're expected to have a nest egg and a retirement fund as well. So, we trip up—spend too much—and regret it later.
If you're like me, you want to manage your money correctly. And it's so, so simple.
So. Multiple bank accounts. People have them to compartmentalize money they earn. I have a bank account for every expense category.
When I get a piece of income, I break it into many parts based on percentages, and each part goes to its corresponding bank account. This allows me to cover my expenses and know exactly how much money I can have fun with.
Here are my 8 bank accounts, and how much of my paycheck I put into each.
(Your percentages and bank accounts may be completely different—mine reflect a lifestyle where I live with my parents (thereby having no rent), have no student loan debt, work a part-time job, and am heavily focused on saving.)
- 15% goes to Clothes (at Wealthfront Online Banking)
- 5% goes to Skincare (at Wealthfront Online Banking)
- 10% goes to Eating Out (at Wealthfront Online Banking)
- 5% goes to Car Expenses (at Wealthfront Online Banking)
- 5% goes to Greece Fund (at Wealthfront Online Banking)
- 25% goes to Roth IRA (at Wealthfront Online Banking)
- 5% goes to Checking (at BofA)
- 40% goes to Savings (at BofA)
The key: only spending what is available in these accounts. Whenever I need to pay a bill, I withdraw the appropriate amount.
I would highly recommend Wealthfront online banking for anyone reading this. Their cash accounts are free, with no annual fees, and they earn 2.57% per year—meaning if you put in $1200, you'd make $30 interest. In any physical bank, like Bank of America, you'd only make $3 or so.
This budgeting strategy has brought me an immense sense of control and freedom in terms of my finances. I now spend guilt-free, but within my bounds, knowing I'm building up savings and a retirement fund that will cushion me in future years.
And that's why I'm not crazy for possessing 8 bank accounts. You should try it!