As a CPA, I know how important it is to have your finances under control. Even though I have been trained to use complicated strategies to managing money, I don’t actually do anything complicated when it comes to my money.
In fact, there is one thing I recommend that everyone do that is quite simple, but I don’t think many people do it:
Open a second savings account
Before you say, “That’s stupid” and leave because you’re angry that I made you come read this post to find out my super secret tip, hold on a second! Let’s look at the reasons why I recommend this.
Why should you have two savings accounts?
- This protects you from over drafting your checking account without dipping into savings set aside for true emergencies like a job loss.
- It helps you pay for unexpected expenses like car or household repairs without using credit cards.
- It gives you peace of mind so you don’t have to always worry about money.
Let Me Explain
Most people I know have one savings account, but we have two. We keep the first one topped off at $10,000.
That’s the amount we’re comfortable we make our essential bill payments with (mortgage, insurance, etc) for several months if my husband were to lose his job.
Our second account is a savings account we also like to keep at around $10,000, but it’s one we’re allowed to use to fund unexpected things like an air conditioning replacement, car repairs, donations, etc. It allows us to be flexible with our spending and absorb rather large expenses without touching our credit cards.
The best thing about having a second checking account is the flexibility it gives you with your finances. The ONLY time I ever stress out about money is when our secondary savings account starts to get low.
But you know what I do then? I figure out ways to make more money so we can top it off.
Do you have a second savings account? If not, what do you think of my idea?
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