Overtime, we have accumulated a lot of accounts. They each serve a purpose in our system. And I do think it can be made simpler.
Inspired by the dividend life article, I started to map out our accounts and money flow. It was an interesting excise to make. Here is the result
The yellow accounts are mine. Yes, I do have a lot. For my former job, I did watch the competition and had active accounts with them. Next to that, I also shop around to get the best deal for the product I want. There are some unused accounts in there. They are closed now.
Some elements worth nothing
- All regular flows are automated. The split of our paycheque into fun money, life happens, household expenses, investing is done for us. No hassle what so ever. This makes a more complex account structure effortless. The only exception are the one off yearly times like holiday allowance, bonus, tax refund. The amounts and timings are not known up front this hard to automate
- Both my wife and I have a fun money account. At the start of the month, this account holds our monthly discretionary spending budget. We can use this guilt free for anything we want, not everything! (thx Affordanything for the quote) Clothes, shoes, eat out, concerts,… you name it. No questions asked. We can also accumulate money here to save up for a bigger item.
- The basic of our investing is automated: the fiscal deductible pension saving and long term saving. This way, we pay our future self first! I hope they will appreciate it.
- We also save money for our kids and god children.
- I have a special account to save up for our 10 year marriage. I heard once a story of a husband who bought his wife each 5 years a new ring. Now that his daughters are holder, they can go along and pick the ring. It is theirs lateron… I had an instant good feeling with this and decided to do the same!
Lessons learned and next steps
To me, it is ok to have that many accounts as long as there is little to no work involved in maintaining them. And they need to be free. For both cases, I can thick the box. Transfers are highly automated and I pay for none of my accounts! Some of these accounts even pay me. How is that!
Our money is decided into different buckets. The main buckets are
- Emergency fund
- Life happens fund
- Travel fund
- Investing fund
Right now, a spreadsheet keeps track of what money is tagged where. Going forward, I plan to set up an account for each fund. That way, it will be even more straight forward to see what money belongs where. It will also help to hid the emergency fund out of plain sight.
What does your account structure looks like?
amber tree leaves 
That sure is quite a few accounts! But since you’ve got automated transactions it sounds like you can live with it easily. I like the simpler approach you suggested regarding your 4 buckets, even having these four, with 2-4 others would reduce the number of accounts you hold greatly. Do your banks charge account keeping fees etc?
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I’ve got more accounts than I probably should have. But between accounts with old employers, new employer, company stock, regular stock, retirement stocks and savings/checking, at least times two for me and my wife and some common accounts, we probably have a similar number of accounts.
The key, as you said, it automation. Despite the quantity, we do not have to spend time managing them, it’s all automatic.
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Good point, I forgot the company retirement accounts. I have a few of them as well!
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I have minimized my number of accounts. One current, one savings in a bundle with the current, one ‘maximum interest savings’ (two now that my assets exceed the maximum insured limit) and one investment account. Maximum automated transactions, including paying myself first when the salary comes in. I do have more funds than I have accounts, but all that is managed from my spreadsheet dashboard. I do not need extra accounts for that. Keeps it simple and cheap….
My girlfriend and me just have a current account together, used for the joint household. We keep enough balance there to cover the monthly expenses, no more than that. We may add a savings account for maintenance costs there once we buy a house together.
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Looks to be clean approach. The full details are also here in a spreadsheet
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I just went through a big overhaul to reduce the number of accounts I have. I still keep separate saving buckets, but use sub-accounts on Amex Personal Savings to deal with apportionment. I still have more than I would like, but aggregators like Mint/Personal Capital make it manageable.
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For now, a spreadsheet is my aggregator. I look forward to such a service in Europe
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I don’t maintain separate accounts for emergency fund, travel fund, etc. I try to keep this simple by maintaining just one checking and one savings account. But where are accounts get complicated is the multiple retirement accounts and credit cards we use for travel hacking.
We may need to start a little chart like you’ve done to keep it organized! Thanks for the post!
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When I recently opened a business checking account to use for our rental properties, I was actually just thinking “wow, we just keep adding more and more accounts for different things.”
I’m with you that as long as you keep things automated and the account serves a purpose it makes sense to keep it. We keep everything in Quicken so it does keep everything organized under one umbrella, but I still wish we could consolidate down… wishful thinking!
— Jim
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I like how you keep individual accounts for each goal. I only have two bank accounts, but I have 4 broker accounts. I like having different accounts so I can use the different tools offered by each broker. However, this is not ideal for my options strategy. For example, I may have the same stock in different accounts. I’m going to consolidate shares where applicable to make sure all the shares I own of one single company are in the same account. I need 100 shares to trade 😉
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for my ptio trading, I use 3 accounts. One would be easier off course. I have a plan in my head to go to only 1 broker and 2 accounts. As I trade on my account and our joint account, i will always have at least 2.
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It seems like you have a very well planned tracking system. Its pretty great that you are saving money for your God children, i have never heard anyone do that until now. The fact that you automate a majority of your accounts must be a huge relief. Tracking and paying all those accounts would be time consuming.
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Saving for our god children is something we wanted to do. This way, when they are in need, we can help directly
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My wife and I keep it simple. Both have a savings account, a retirement account, and a checking account. We will soon be setting up a savings account for our daughter (6 months old) and will soon have a 529 account in her name. I also have 4 credit accounts open when I was building up my credit and a Mortgage account. It adds up quick and im only 27.
I feel like you need a digital version of your structure… Don’t want those stickies going in the wrong place.
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good thing is that the stickies are only for demo purposes. a spreadsheet is the true holder of the data!
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Counting our retirement and investing accounts our tree would look pretty similar to yours – it seems unmanageable but like you said, automation saves a lot of the work
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glad that I am not alone…!
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That is a lot of accounts! I only have a chequing account, a savings account, a USD account, TFSA investing account and RRSP investing account. So that’s 5!
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hey ambertree.
for me the number of accounts would be too much. But if you can handle this, its okey 🙂
I have one brokerage account, one checking account and one daily allowance account.
every month there goes automatically 200 € to my daily allowance account. if there is enough money in one of those accounts i put it in the brokerage account.
best regards
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Automation is the key to our accounts.
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Hm great question … a couple everyday accounts, one CC, a few different savings accounts (I like separate ones)… at a guess maybe 8? That’s not counting things like investment accounts though, which is probably another half dozen.
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6 and are too many (not easy to follow):
1. professional account ( I cannot without)
2. personal account ( where my professional account pays me monthly, from where the automatic rules are taking out the mortgage, same for assurances, for savings, for payment for retirement plan, for savings to the account of my child, for bills etc)
3. savings ( this is for holiday, emergency, extra saving, etc – and I am lucky to tell that I used it 2 times per year for holidays, and once when we bought the aprt. and I cleaned the account)
4 an account where it is still blocked the guaranty of the previous aprt. but i still have no contact with the owner to unblock it
5. account – savings for my child (used when we bought the aprt.)
6.current account where the rents of our already existing proprieties are arriving
I hope 4. to unblock and clean soon.
My issue with many accounts are the fees. I disagree with fees payment for any bank account, this is a enough reason to change the bank.
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fees are no fun. All of my accounts are free, except one, where I pay 0.5EUR/month to have an additional bank card.
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I read the comments and I think I forgot 3 retirement savings accounts (one contributed by my company, one contributed by me, one contributed as professional).
UPS 😀
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So, you have a job and a side hustle! Nice
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We also have a lot of accounts. When it takes me a few scrolls of the screen to see them all in Personal Capital, the I know we have a lot!! But in all seriousness, they are all easy to track and understand. Within Vanguard itself, we have a number of different accounts – taxable brokerage,two kids 529 plans, two IRAs, kids investment account.
And cash accounts we have four. Long story but very good reasons for all of them.
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Similar story. As long as it is easy to track and transfers are automated, then it does not really matter
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Wow that’s a lot. We have 1 transaction account, 3 savings accounts, an account to transact our investing, our superannuation account and, if it counts, our actual share portfolio balance. So 5 or 6 between us.
Tristan
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That is definitely a lot of accounts! We have two bank accounts (checking/savings) and four retirement accounts. We have about 10 credit card accounts (with no balances) so that we can earn travel points. I have them on a spread sheet too. So important to keep track! When we did our wills recently, we looked at making sure it was easy for our kids to find all of the accounts as well. That was something that bothered me – thinking they would have to try to find everything – especially with everything being online.
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It’s great to visualize your accounts and see how they are used; it can help to find redundant accounts or simplify money flow. I personally like to separate money for different purposes in different accounts as you saw in my article; but there’s no perfect way since everyone is different. As long as the structure works for you, it’s perfect! 🙂
I also have some older accounts which I’ve kept open (and empty) since closing accounts can impact your credit score (at least here in the US).
Thanks for describing your system, it’s interesting to see how other people’s financial systems.
Best wishes!
-DL
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