How Multiple Bank Accounts for Budgeting Curbs Spending

Having only 2 family bank accounts is the norm; I get it.  But a few years ago, my wife and I decided to try multiple bank accounts for budgeting.

Using multiple bank accounts for budgeting allows for a greater level of organization between monthly bills (checking), emergency savings (savings account #1), saving all year for the holidays (#3), short-term savings (#4 – vacations), and long-term savings (# 5 – a new car, appliances, etc).

But why in the world would you really need more than checking and savings?

For years my family only had a checking account and a savings account. If that’s where your family is today, my suggesting you add multiple bank accounts for budgeting might sound crazy, but hear me out!

I promise there’s a tremendous benefit to your having multiple bank accounts for budgeting!

For us, multiple bank accounts for budgeting literally mean the difference between financial success and financial disaster!

Specifically, I recommend having 5 bank accounts.

So in this post, I’ll walk you through what those 5 are and how my family handles managing multiple bank accounts with ease.

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What are the multiple bank accounts for budgeting you should have?

Now I know there are posts out there telling you to use upwards of 14 different bank accounts.

Honestly, that makes me feel a little overwhelmed just reading their headlines.

So fear not; we’re not getting crazy here. If you want to add more to my recommendations go for it! Anything that helps you be more focused and intentional about managing multiple bank accounts is a good thing.

But specifically, here are the 5 budgeting bank accounts I have that you should have too.


First off, we’ll assume by default that all of you at least have a checking account.

Now I haven’t actually carried a checkbook in over a decade and don’t even have one currently but it’s still commonly referred to as a checking account.

For us, the checking account serves a few main purposes.  It’s:

  • How We Pay Our Bills – Is where we draft all our main utility and mortgage payments from (using the bank’s online payment system)
  • Where We Put our Paychecks – Our paychecks get direct deposited into automatically
  • Where We Take Out Cash From – Where we withdraw our weekly cash allotments from (more on that below)

So pretty straightforward.  It doesn’t generate much in the way of interest, but then this isn’t an investment; it’s simply a holding tank that money passes through on it’s way elsewhere.

The powerful benefits of choosing a credit union over a big bank

Credit unions being smaller, more locally-focused with likely just dozens of employees rather than tens of thousands simply tend to care more about your business.

They don’t have branches around the globe and you are more than just a number to them and generally speaking they want to keep you happy.

Big Banks have a tendency to just see you impersonally and they know that if you leave, there’s another customer around the corner waiting to take your place.

Of course, there are exceptions to every rule, but I’ve banked with 2 of the big dogs and never will again.

Never reach for your debit card again! The Power of paying in cash

Now I mentioned our “cash allotments” above.

While I wholeheartedly recommend paying bills automatically from an online payment provider (ideally your credit union or bank’s system), I also strongly recommend rarely using your debit card.

Instead have a set amount of cash that you take out every 1 or 2 weeks to pay for things like:

  • Grocery shopping
  • Gas money for you and your spouse
  • Slush/spending money for you and your spouse
  • Family money for going out to eat, etc.

The reason I recommend paying these things in cash is simple; it requires you to think about, talk about and set aside that money in advance.

Once it’s gone, it’s gone until the next pay cycle.

This has a net effect of making you much more conscious about how and where you spend your cash. The end result being you scrutinize your decisions more and you will spend less.

I have a detailed post that walks you through every step of how (and why) the Cash Envelope System (click to read my article on why and how to set that up) works best, so I highly recommend you take a moment and check that out.


multiple bank accounts for budgeting black and white photo of a woman holding an umbrella in the rainMiddle Class Dad

This one is crucial for the long-term stability of your family!  A simple savings or money market account works great.

This should not be viewed as an investment; it’s there for when you truly need it so you want to be able to get at it quickly. Thus you should park it in an IRA or other investment option.

I do NOT, however, recommend just keeping the funds in your checking.

The main reason is that when it’s there and you see it every day it’s tempting to justify using it (I don’t want that new grill, I NEED it!).

Out of sight and out of mind is exactly where you want it to sit and park itself until a true emergency presents itself.

Why an emergency fund is crucial for your budget:

  • If you own your home and the air conditioner breaks and needs to be replaced (usually about every 10 years and easily $4,000 or more.  Generally speaking, most homeowner’s insurance policies would cover replacement from damage to the system from some unpreventable source but not just due to age)
  • If you own your home and the roof needs to be replaced (usually about every 15 years and again can be $5,000 or more – same as the above with regards to insurance)
  • If your car gets totaled and the other party or your insurance company won’t pay to replace it
  • A medical emergency (chances are you have a high deductible and a co-pay.  Guess where that difference comes from?  That’s right; your wallet!!)

I also have a post that details much more on setting up your Emergency Fund (click to read my step-by-step guide to setting up yours). So take a moment and check that out if you don’t have one yet.

How much should go into my emergency fund? 

multiple bank accounts for budgeting close up of a portion of paper currency Middle Class Dad

The general rule is about 3-6 months of expenses according to financial guru Dave Ramsey That’s a big spread, so here’s how I recommend you do it in greater detail:

  • If you have 2 sources of primary income in your house, 3 months is probably fine
  • But if you have 1 source of primary income I would lean more towards the 6-month end (how far to lean would depend on how stable that job is.  If you’ve been employed under 2 years and/or your career/field has a tendency to change jobs every few years I would go 6 months for sure unless it’s REALLY easy to find new jobs in your field and area).
  • And if you are a freelancer or have an inconsistent income I would go with 6 months

I think you get the idea.

The greater the consistency and stability, the less you need.  Of course, I know nothing about your situation and I’m not a financial planner; I’m just telling you what works for me so this is no way should be considered financial, legal or professional advice.

How do I figure out what “household expenses” are?

In determining your expenses, bear in mind we’re talking essentials.

If you or your spouse lose a job, you’ll want to immediately cut out any unnecessary expenses such as cable TV, lawn care or house cleaning people, going out to eat, etc.   So that should leave you with:

  • Mortgage or rent
  • Utilities – electricity, gas, water, trash, etc. (I would keep the basic internet as it will help in the job search)
  • Gas money
  • Food – basic groceries (time to skip the truffle oil and high-end wines)

If you have debt, I don’t recommend you stop paying those bills, but they should be last on the priority list (car loans excepted as you can’t look for a job if your car gets repossessed) and you should just make the minimum payments on them until the income/job situation gets resolved.

I wrote a very popular post some time back on being unemployed, so if you find yourself in that boat, check out my post on When You Become Unemployed.

So simply add all those expenses up and multiply by how many months make sense for your situation. 

For a family of 4, most likely you’re looking at a minimum of $10,000 and possibly much more if you have a high income.

How debt factors into building your emergency fund

If you have debt, I would just do a starter rainy day fund for now ($1,000 or so) until you get out of debt.

Getting out of debt should be the primary goal if that’s the stage you’re at.

If you have debt and want to know how my family got out of debt, check out my post about Dave Ramsey’s Baby Steps (click to read my complete breakdown of the steps).

That is the blueprint my family used to go from being $60k in debt to living debt-free!

If you are out of debt, just realize it may take time to get your rainy day fund built up and that’s OK.  How long it takes depends on how frugal you are.

6-18 months would be ideal since Murphy tends to bring those emergencies out of the blue and when we aren’t financially prepared for them that’s when our tendency is to go back into debt to get it resolved.  So keep the lifestyle low and make sure both spouses are on the same page and you’ll get there quick.


This is where you’ll set money aside to replace your cars down the road or similar expenses.

That isn’t an emergency since we can predict the need to replace cars around the 10-15 year mark.  There could be other expenses too that you want to plan for a year or more in advance; kitchen or bath remodel?

Adding a pool or hot tub? Spouse planning to go back to college?  You get the idea.

This too is a simple savings account and the beauty of having all these accounts in one financial institution is that you can quickly, easily and online do balance transfers from one to another.

This is often one of the most overlooked multiple bank accounts for budgeting because our society loves to just reach for the credit card or car loan for these types of expenses.  But they are easily budgeted and managed without debt with just a little planning.

How much should we save in our long-term savings?

How much you put in here each month depends on your needs.

But say you know you want to replace your spouse’s car in 2 years. You also know they want a late model Nissan Leaf. Then you simply need to look up what the going rate is for that car (looks like $8,000 to 10,000 with a quick Kelley Blue Book check).

Take the average amount (let’s go with $9,000) and factor in the additional expenses of tax, title, and license.

This will vary by state, but for our purposes, let’s assume that adds about 10%, so we’re now at $9,900.  Simply divide that by 24 and you now know that:

You need to save $412/month to buy that car in 2 years!

If that seems unattainable you should consider an older model (I looked at 3-year-old cars in my example) or you should give yourself more time.  The one thing I know for sure is you can’t get where you want to go if you don’t have a map and a plan.

Hoping for the best likely leads to pilfering from your rainy day fund or finding yourself with a car loan; neither of which help the long-term financial strength of your family’s future.

How do I save up for multiple things?

In my experience, having just long-term savings, short-term savings (which I get into below), in addition to the emergency fund is plenty.

Things that we know we don’t have to have right away (like replacing a vehicle in a year or two or maybe a new fridge next year) can go in long-term savings.

But the summer vacation you know your family wants to take THIS year should be in short-term savings.

If you wanted to get REALLY organized though, you could add 1 additional saving account for things like annual or quarterly payments that sneak up on us.

That could include renewing your car’s registration, but even any utilities that aren’t paid monthly (our trash company bills quarterly).

Just figure out what the expense will be, divide that by the number of months you have to save before it’s due, and then transfer that amount each month into that account. Then just transfer back the total when the bill is due.


This one is similar to #4 except it’s for expenses you know you’ll have in the next 12 months.

Things like:

  • Vacations!
  • Minor home repair/remodels

Again, as with my car example, figure out how much you are planning to spend and by what date.

That will tell you how much you need to be saving each month.

That $3,600 trip to Disneyland next July means putting aside 0/month if you start planning in October and some vacations might require purchasing at least some things like airfare or hotel well in advance, so do the math and plan accordingly.

But either way, multiple bank accounts for budgeting is essential!


multiple bank accounts for budgeting glass jar labeled Presents with a lot of hundred dollar bills inside Middle Class Dad

This one is usually the least obvious but really can be the most crucial of the multiple bank accounts for budgeting.

Check out much more detail in my most loved holiday post about how to Save Money for the Holidays (click to read my article).

How many of us wait until November and realize we have nothing saved to buy presents with?

We then scramble, cheap out, or use credit cards to save the day (and then pay for it; literally and figuratively, the whole rest of the coming year).  No; this one is really a no-brainer.

How much should we save for holiday spending?

As with the 2 savings accounts we first need to figure out how much we want to spend.

That’s a totally arbitrary number.

For my family of 4, we typically spend about $1,000 for a Christmas season (which includes sponsoring a foster child’s Santa list).

Since we know we’ll start spending that in November, we divide that $1,000 by 11. Thus we save $90/month starting in January to ensure we are never stressed out or going into debt for the holidays!

That amount may seem like a pittance for your family or it could seem like a fortune.  The amount really isn’t that important.  As I like to say . . .

Presence is More Important Than Presents.

So what I just outlined is exactly how my family does it.

Your family could be totally different or you may have additional needs I haven’t thought about.

Maybe you don’t celebrate any holidays in December and don’t need #5.

The idea is more to get you thinking about the long-term end game and not accidentally sabotaging your family’s financial future by not properly planning for things.

But to do it right, you need multiple bank accounts for budgeting.

If your family isn’t already on a monthly written budget that you map out, agree to and stick to before the month begins, I WHOLEHEARTEDLY recommend you do that.  Your household budget is your family’s road-map to financial success.

bank accounts DRIVING BLIND

I have a copy of my Budgeting Spreadsheet available at no charge.

It’s a simple, highly customizable, Excel spreadsheet (click to get it in your inbox now) and you can download it quickly and easily FOR FREE!

Is it smart to open multiple bank accounts?

The short answer for me and my family is yes; it helps us stay organized, keep track of things, and not go over budget.

I personally don’t see any downsides to being better organized with bills, money, and expenses.

It’s easy to transfer between accounts and you can quickly log in and see at a glance how much is in each account. If everything is just parked in your checking account, you have no idea how much is earmarked for specific expenses.

PLUS when everything is in your checking account, it can be VERY tempting to spend it.

Can you have 2 bank accounts with different banks?

Yes, is the short answer. But personally, I would not.

I get that maybe back in the days of the Great Depression, having your money spread across multiple financial institutions may have protected some people, but that’s not the world we live in today.

Today, we middle class moms, dads, and people in general lead busy lives.

Time is stretched thin across long hours at work, lengthy commutes, and, if you have kids, shuttling the kids around all week long.

We need convenience and simplicity and having more than 1 bank adds an unnecessary layer of complexity.

While it’s true that some banks might offer better interest rates on your savings accounts, ultimately your short and long-term savings accounts and emergency fund are NOT investments.

You should have a Retirement Savings (click to read my guide on why and how to set that up) but the reason to have multiple bank accounts for budgeting is not to earn a few extra pennies on your savings.

Bank savings accounts often earn well under 3% interest. Compare that with many mutual funds earning 10% or more, and it’s not hard to see that savings accounts are not the way to build wealth.

So keep your accounts at one bank so you can easily transfer between them and keep track of all of them at a quick glance.

Should married couples have separate bank accounts?

No, is the short answer.

When you got married, you said “I do”. You didn’t say “I do . . . sometimes”. In short, for a marriage to be successful, both people have to see it as a joining; a true union. Both have to be all-in; for better or for worse.

But it’s not just me being old fashioned. The statistics back it up too!

In a recent survey on love and money by TD Bank, almost 75% of all couples in the US share at least 1 bank account. That does to be on the decline with millennials, as only 58% of millennials are doing that also.

Not surprisingly though, the divorce rate for younger couples is almost double what it is for adults 50 and older, according to the American Community Survey by the Census Bureau.

But either way, well over 50% of couples do share bank accounts, and you should too!

I go into much greater detail on that in a recent article, so I highly recommend you take a moment and review that; especially if you have a spouse or future-spouse who isn’t quite on board.

Just click the link to read it on my site.

So what are my . . . 

5 Top Reasons You Need Multiple Bank Accounts for Budgeting?


If all your cash is parked in your checking account you’ll be tempted every time you check your balance or see it on that ATM receipt.

Even the strongest of us get tempted to go a little crazy on spending; a nice bottle of wine or a gift for your spouse. Maybe something special for the kids? Those are all great things! Things that need to be thought out and budgeted for.

Thus having multiple bank accounts for budgeting keeps you in check.


As with the above, having your money organized into multiple bank accounts for budgeting keeps you focused. I can see within 30 seconds on my phone exactly how much we have saved for Christmas so far. Ditto for our emergency fund.

When we’re organized and focused we spend less and are much more likely to hit our financial goals. Setting up our budgeting bank accounts the right way is a huge part of that.


Being intentional, focused and organized with our money means you’ll be much less likely to blow it.

Things like spending more than what you had and paying huge overdraft fees or returned payment fees will be a thing of the past.


Go all year until November and then trying to figure out how to pay for those Christmas or Hanukkah gifts is a recipe for disaster!

No matter what religion you celebrate, gift giving at some point throughout the year likely plays a role. Thus it’s crucial you have a budget and a plan for how to pay for that. That plan needs to start well in advance! Thus multiple bank accounts for budgeting become crucial.

Otherwise, you’ll be reaching for the credit cards and then starting the new year in a panic about all that new debt you racked up.


We can’t achieve our financial goals (and thus our dreams) if we’re scrambling to make ends meet.

Thus, part of your plan for success has to involve multiple bank accounts for budgeting. Think how much better your life, your marriage, and your family could be if worrying about money was a thing of the past!

Want to dig in further, one of my most popular posts is about Financial Freedom and Living Your Dreams (click to read my article). Take a moment and check that out when you’re ready to start living yours!

As you get your financial house in order, it’s also a GREAT idea to get a will if you don’t have one already.

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We paid just a little over $50 for a mutual will (where we are both on there) that was specific for our state.

It was incredibly easy to download the form, fill it out, and now we have the peace of mind knowing our daughters are protected in the event something tragic happens to one or both of us. So check out US Legal Forms and see just how easy and inexpensive it is to protect your loved ones.

Final thoughts

In this we post, we looked at the crucial reasons you need multiple bank accounts for budgeting.

The old model of just a checking and savings doesn’t really work if you really want to get ahead financially.

We also looked at the best ways of managing multiple bank accounts so it just flows naturally in your household’s budgeting process.

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You could possibly save thousands a year and you have nothing to lose in checking! It doesn’t even ding your credit score to look at the offers!

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If you like this post on multiple bank accounts for budgeting, please follow my Budgeting board on Pinterest for more great tips from myself and top parenting experts!

While I have years of successful financial & budgeting experience and run several million dollar businesses and handled the accounting, P&L and been responsible for the financial assets of them, I am not an accountant or CPA. Like all my posts, my posts are my opinons based on my own experience, observations, research and mistakes. While I believe all my personal finance posts to be thorough, accurate and well-researched, if you need financial advice, you should seek out a qualified professional in your area.

Photo credits (that aren’t mine):

Rainy Woman –
Presents Jar –

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