When you think of your bank account, what do you imagine? An amount of money held by a bank? A line on your online statement?
Used well, your bank account can be a good tool to help you better manage your money.
Here’s what you need to know.
You probably need more than one
To receive your income from your job or business, you most likely have at least one bank account. This account is probably also your transactional account, from which you pay things like your credit card bills. But it doesn’t need to be the only account you have. Setting up multiple accounts can be a good way to make sure that your money goes where you want it to go. You might have a “holiday” account, or an “emergency savings account” to allow you to save sums of money for those purposes without the risk of having them eroded by day-to-day spending. Which brings us to the next point…
You can set automatic payments to your other bank accounts
The best way to save is often to pay yourself first. Think about setting up an automatic payment that sends money from your transaction account to these other accounts on a regular basis (on payday, for example). A hands-off approach means it’s much less likely that the payment will be waylaid by impulse spending or other sudden expenses popping up.
You can give them their own names online
They don’t have to be “01” and “02” – why not have a bit of fun with it? You can usually rename the accounts online so that they display what they are for, such as “cocktails in Fiji” or “my kids’ university money”. This can be a useful psychological tool to keep you on track.
Think about whether you have the right type for each purpose
When you’re saving, every dollar counts. So, it’s important to check that the bank account doesn’t entail extra fees: usually, using a savings account for day-to-day spending can be quite expensive. Similarly, you usually won’t get anything in returns if you leave money sitting in a transactional account. You most likely need to be saving in a dedicated savings account, and probably one like a notice saver, or even a term deposit, to get better interest rates. This is something to think about if you’re saving long-term and know you won’t want or need to access the money in the immediate future.
You might want to hide some of them, or have them elsewhere
If you’re the type to be tempted by seeing money in accounts on your online banking dashboard, you can ask the bank to hide them. You can even hold accounts with another bank if you’re using them for long-term saving, to make it one step harder again to access the money.
You can share some
You can set up some accounts with shared access, and have some without. That is useful if you’re part of a couple where you keep some of your finances separate, or if you’re in a flatting situation where you share bills. You can also have joint accounts where both of you have to agree to money being taken out, which can be helpful if you’re working together towards a goal.
Like to talk?
Wondering where to start? We can help you work through your personal finance plan. Give us a call today and we will help you to make sure you’re on track, whatever your goals.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
