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The author, Rachel Morgan Cautero.
Courtesy Rachel Morgan Cautero
My family uses separate banks for bills, spending money, credit cards, and investing.It can be a lot to keep track of, but it makes budgeting and long-term planning so much easier.Having a separate account just for discretionary funds makes it easier to spend money guilt-free.
I’m a financial writer, so you’d think that I enjoy poring over all things money-related, from my family’s monthly budget to how our retirement savings stacks up to our long-term goals.
But for the most part, I’m more of a set-it-and-forget-it girl, for everything from our bills to biweekly spending allowance to investing accounts. That’s why we use several different financial institutions for our money, and it’s taken the stress out of money management.
Our main account is the busiest
Our joint checking account has the most activity, though it’s almost all automated.
Most of my husband’s direct deposit goes here every payday, as well as my freelance earnings. It’s also the account from which our bills are paid — everything from our mortgage to our utilities to our monthly investment contributions to our student loan payments.
And I automate bills whenever I can. It takes the headache out of the monthly budget for me, since I know exactly that all my bills will be paid on time and without me even thinking about it. But just because it’s automated doesn’t mean I don’t pay attention. I have a separate calendar (synced with both mine and my husband’s main calendars) that shows the exact bill amounts and on what day they’ll be drafted from our accounts.
Our ‘spend’ account is our ‘fun money’
This is a money tip I’ve learned from my parents — keep entertainment funds or “fun money” separate, and always allow room in the budget for this if you can.
After bills and contributions to our respective investment accounts and our boys’ college funds, we funnel the rest into an entirely different joint account — our ‘spend’ account. Then it’s ours to spend on things like eating out, clothing, small home upgrades, and other miscellaneous items.
Being able to spend guilt-free money each month has done wonders for our budget.
First, it makes it nearly impossible to overspend and throw off our bottom line for the month. And it’s easier to commit to a budget when you have discretionary funds built right in.
Credit cards, for points only
Learning how to use credit cards responsibly can be intimidating. Honestly, I think that’s a lesson that all 20-somethings have to learn. But being able to use them responsibility, and then enjoy the benefits and rewards they allow, is such a game-changer.
While rewards credit cards offer rewards ranging from cash back to discounts to free hotel rooms, my favorite perk has to be the miles.
We have a few credit cards, but the ones that get the most usage are those that earn us airline miles. And there’s truly nothing better than racking up miles for everyday spending, then scoring a flight for an upcoming trip for free.
This is exactly the strategy we’re employing for an upcoming anniversary trip to Cabo San Lucas. If all goes according to plan, we’ll be able to purchase those flights solely with miles by the end of the year. That leaves us even more room to splurge on the hotel — unless I find a good deal on points, of course.
Investments, retirement, and college savings, oh my!
While most people probably use a separate financial institution for their investments and other long-term financial goals, like saving for college, it’s the fourth financial institution on our dossier, and probably the most important.
While my husband works for a larger company and has a standard 401(k), I’m a full-time freelance writer, so my retirement options are a bit more complicated. I have both an IRA and a SEP IRA, the latter of which offers benefits like tax-deductible contributions and a higher contribution limit of up to $66,000 in 2023. A SEP IRA can also be combined with a traditional IRA, another perk.
We also have two separate 529 college savings plans for each of our boys, with automated contributions. I love that our 529s provide tax-free growth for education costs, plus flexibility beneficiaries and potential rollover options.
While they sometimes vary, our contribution amounts are on par with what our financial advisor recommends to keep us on track with our long-term financial goals — namely, retiring at a decent age and paying for undergrad for both our kids.
Separating your finances across different banks may not be for everyone. It requires a certain amount of organization, plus a lot of log-ins and passwords, if I’m being honest.
But it’s helped my family stick to our budget and work toward our financial goals with minimal money stress. And when it comes to budgeting, I don’t think you can ask for much more.