Multiple checking accounts –

If you have many checking accounts it's a good time for you to consider streamlining this part of your life. Elaine writes that she has 4 checkbooks and uses different accounts for different things. As a streamliner I am almost speechless as I think about how complicated that must make things. Some complexities that come to mind:

• That means Elaine has to move money from one account to another just to keep the balances high enough to use the accounts.
• Elaine gets 4 statements every month.
• Each account should be reconciled every month (I doubt she does that but I can't bring myself to ask).
• I imagine promotional pieces come from each bank stuffing her mailbox frequently.
• What if she is spending money that is supposed to come out of a checking account that she does not have the checkbook for at the moment?
• She has to keep straight which account is for what types of expenses.

That all adds up to headache to me.

To streamline I suggest an alternative. First Elaine can simply move all her funds to her favorite bank and close 3 of the accounts. That bank might have the most locations close to her, offer free money card transactions, have the easiest download center online, and possibly all these features.

If she needs to track expenses by category the manual method is to put a code in the check register as she writes check. Periodically she tallies expenses by code.

The computer method is to download transactions to money management software such as Quicken or Microsoft Money, code the transactions to relevant categories, and enjoy the simplicity of automation totaling expenses by category. The great thing about the computer method is that the computer remembers how expenses from a particular vendor are categorized and automatically enters them next time she visits the vendor.

If you have multiple checking accounts please share the reasoning behind keeping them in a comment below. If you're going to close some accounts now, let us know that too.

 

 

Comments

[Don Crowder]

Hello Susan, I agree with you about the need to streamline one's banking but I also recommend that folks have a separate account for online expenditures simply as a means of containing a potential catastrophic loss. For example, my personal checking account is 'connected' to my Paypal account and I have a debit card for it. I only rarely write a check on this account, instead I use the debit card for online purchases from companies which don't yet accept payment via Paypal. I try to limit the combined balance of this checking account and my Paypal account to $300 or less. I consider myself a savvy surfer and a web-wise individual but only one moment of confusion is required to be taken in by a phishing scheme and no amount of personal knowledge can protect you from a corporate information leak.

Most of the time my combined Paypal/checking account balance is under $50 but I make specific deposits to cover planned purchases. The dollar amounts would differ for a business or a power shopper but the concept can and should still be applied as a means of limiting one's financial risk.

[James]

We actually have 6 checking accounts. We have a primary account that we pay are typical monthly bills with. My wife has her own account for her personal expenses (I use cash). We have a household maintenance account where $100 a month is automatically withdrawn. This is for major household repairs/maintenance. We have a gift account-same thing as maintenance. We have a health care account for major healthcare expenses-same as above. Finally I'm a teacher so the last account is for summer expenses and vacation-any extra money after regular savings and stuff is put in there.

I found this very simple. For example not every month I'll have $100 in maintenance expenses, but it's nice to know I have an account growing. Once I reach my comfort level ($2200) I begin using the money to do things around the house that are optional.

I find this system to be beneficial. I know which account is which, and what purpose it serves.

[Nate Dame]

I've had 2 checking accounts for a while but it's only been a hassle. All I need is a few checks to clear and life will get easier!

I also use Mint.com to track where my money is going. It's a great (and free) tool that will automatically pull in and categorize everything you spend on your credit card, checking, even investments and other financial products. I absolutely love the service and recommend it to everyone I know.

[James]

I am similar to Rebecca, I have 2 current accounts (What we call a checking account in the UK), both at the same bank. One gets my salary and pays for rent, bills etc. The other is for shopping and fun.

[Dustin]

I use two bank accounts. One is with the brick-and-mortar bank in the national chain that I've dealt with for several years. They also have superior online bill pay and deposits via local ATMs.

The second is with the online bank where I've had my savings account for about the same duration of time. That account bears interest on the checking balance and allows for seamless transfers from savings. (Not that I use it, but it also allows for overdrafts in a friendlier fashion.)

[Rebecca]

We have a single account for all direct deposits and bills, then my husband and I each have personal fun-money checking accounts at the same bank. While it is technically 3 accounts total, they are all at the same bank and easy to move money between instantly. All 3 accounts download and reconcile in Quicken.

We originally just took our "allowance" off the main account and didn't have others, but we found that unless we took the money out in cash we regularly lost count and over or under spent that money. Since we both buy a lot online, cash wasn't practical. This is, and its easy.

I can't imagine having accounts at multiple banks though. That would turn into a management horror.