Ready to start a budget but don't know where to begin? Candice talks about the benefits of having multiple bank accounts.
Hey, good morning, everybody. I was trying to be “all advanced” and get everybody scheduled to get my things scheduled out, and it was not wanting me to go live because I was on the wrong one. Anyway, so you know what time it is… it's Thursday, 10am, and it's Coffee Chats with Candice. I want you to grab a beverage of your choice, or your coffee, and no judgments, [ well, actually coffee or beverage of your choice and judgments,] and that include your finances, too! And let's chat “How many bank accounts we should have?”
For those of you who don't know me, my name is Candice Montgomery, and I am the founder of “Monetize Your Dream,” a course for new and aspiring women entrepreneurs to master business basics. And “Beginner's Guide to Budgeting.” I help everyday people like you learn how to budget so that they can pay off their debt, save money and experience financial confidence. I own three businesses. The first one, my husband and I started in 1996. It's in it's 27th, I know you're thinking, “Candice, you only look like you're 30!” Anyway, we paid off over $450,000 in 7 years time, and since 2022, we've been completely debt-free in our personal and business lives. I am passionate about business and budgeting and sharing that with you. If you're watching live or catching the replay, it really helps engagement and get my message out if you can like heart, or share my message my video, so please share with your peeps.
How Many Bank Accounts Do You Need?
All right, so Bank Accounts: How many should you have? Why do you need more than one? Great question. A mistake that I see people making is that they have one or maybe two bank accounts, and they're trying to do everything from there. You can't pay bills, spend and save all in one place, you need organization and the system. I have 25 accounts – I know crazy. We've already established this. This is not anything new. My CPA thinks I'm a nut too, but that's okay. Those are both our personal and our business accounts. We're not talking business accounts today – we're going to be talking personal and I have nine accounts, which is still a lot, but each one are set up with a purpose to benefit us the most. I'm also going to open an additional four accounts, because I had a brilliant idea last night, and whenever I was putting my script together, and I was like, “Oh my gosh, why did I do that?” So anyway, this is going to help me, too, as well.
You don't have to go out and open up 10 accounts today. I've spent years building these accounts as I need them. You might not even ever open up five accounts, so don't be overwhelmed by this information. It's a new and different perspective on the way you bank, save and how this can benefit you, but I call these a “holding account.” Simply put, there is a place for the money that we have earmarked for specific purpose, so that when we spend any funds from those accounts, I transfer to our operating account. In our operating account, is where our income is deposited. I pay bills and expenses from one account, so I put everything there and then I can then transfer out. Yes, it seems like a lot of work, but really, it's not when you get into a system of doing it. And it's helped us have more money than what I could have ever dreamed we would possibly have.
You have online accounts and these keeps you from being tempted to spend the money so they're a little bit harder to get to. You can transfer it out from any bank, you can do an external transfer, and then it takes a day or two for your online bank to get it. And then when you're trying to do the reverse, and you want to put that into your operating account or you're needing to spend that, you need to give yourself like three to five days because it can take three business days to get that money and I've talked about that before, but it's there so that you can't make this rash judgment call and say, “Oh my gosh, I can have this, I gotta have it now!” – it's definitely where planning comes into play.
One of our accounts is earning about $70 a month in interest – that's free money people. If the interest rate stays the same or continues to go up over the course of a year, that's $840 of free money based on the current balance that is based on the current balance, sorry. As the balance increases with interest, the monthly interest increases as well. It will be more than $840 for the year, again, free money. And that's just one account. So multiple accounts, you can do that. And then you can keep getting free money, so it really helps to build your savings account when you're using this to your advantage. These are online, money market accounts or high yield savings, so many market accounts, they have check writing privileges, and so you can have that account, be a money market account, and then you can write checks, and you wouldn't have to do the transfer. I have ours in high yield savings so that way, it gets the most interest and and then I don't have access to it as easy as. I don't have to use it for our emergency fund, the way I have it set up is I have one of them, one main emergency fund, and then I have emergency fund checking account that has $1 in it. And if I had an emergency, like a true emergency, like our plant pipes broke, which has happened twice, or something else happened, and I needed the money now I can transfer money from that online savings account to that online checking account, and I have a debit card that is connected to it, so I could pay with that immediately. Those funds are immediate, but I only have that for emergencies. And like I said, I keep the balance in that emergency checking account at zero. I just I don't think about it, you know, it's just there. I know it's for an emergency. And I don''t think about using it. But you might be saying, “But Candice, why don't you just invest? Or why don't I just invest?” Something to keep in mind is that these are not investment accounts. These accounts keep your money in liquid for if and when you need to use it. Investment accounts have a much higher rate of return, and are not easily as liquidated. Examples would be your Roth, your 401(k), your CDs, etc. And anyway, I want to answer any questions and help you with setup, so send me a DM saying, “I want to know more.” I have included some additional information in the description for you to do your due diligence.
For example, these high yield savings rates are higher than we've seen in 16 years. And they've been pushed by the Federal Reserve Rate Hike Campaign that started in March of 2022 to tame inflation. So, again, like I said, some banks call their savings accounts, “money market accounts,” and they traditionally offer the ability to write checks, while savings do not. I mentioned earlier about the the transfer, It take one to three days, so be sure to have enough cash cushion. Anyway, I hope that you take this advice and you start getting free money because, everybody loves free money. And once you have fully funded your emergency account, then that money just continues to grow because you have the interest there. So you know, $1,000 a year or more, depending on the rate. Now their rates right now are anywhere from like 4.3& I think to like 5%, maybe a little over 5% and so to kind of give you an idea of what that is like a regular savings account at your bank may pay point 1% or point 2% or something like that. And that may be like seven years and promote so it doesn't, it doesn't benefit you to keep your money there when you're trying to build it. So again, this is for saving and not spending. So maybe your annual expenses like your taxes, your vacation, so you can continue to build up and use the interest for to your advantage.
All right, so I have chatted long enough. I will see you guys next Thursday at 10am for Coffee Chats with Candice. I hope you have a fabulous day and we had a cool frat yesterday. Well, I guess it was the day before yesterday, and our temperature got down to 92 degrees. It was actually kind of chilly. We were like, “Oh my gosh!” and it was cool at night. It was like 68 or something like that insane. But today, that dream is over, and we've returned to the 108 degree temperature. Anyway, I hope you have a great day, a great weekend and happy researching on your high yield savings accounts! Talk to you soon.