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  1. I don’t see how splitting your money into two accounts is going to make things easier. You still have the same amount of money and the same amount of bills. There is LESS chance of bouncing a check if there is more money in the account, say, all your spending money in one checking account.

    • Nikolaus – there are many ways to budget – but this system is really geared towards folks who are struggling by living paycheck to paycheck. If you are living like this (like Charlie mentioned he and his wife were) and follow this approach – it will make your finances a lot easier to manage.

  2. I have two personal checking accounts, a business account, two savings accounts, and an online money market account. The two personal checking accounts are with separate banks (bank A is for fixed expenses, and bank B is for variable), and the business is at bank A as well. The savings account from bank A is for Christmas savings (put aside $X/month so come Christmas I have all the money I budgeted for each person I plan to buy for – fixed expense until Christmas). I include this amount in what gets direct deposited to the bank A checking and then transfer the day after (automated) to the savings. The 2nd savings (with bank B) is for major planning (vacation, buying a house, etc). The money market account online is my emergency fund (since it’s supposed to be for emergencies only, I tend to forget I have this account making it easier to not spend on a non-emergency).

    Question: Currently, bank B offers 4% interest on my checking (yes 4, not .4), but I have to have 1 direct deposit or 1 ACH each month and use my debit card at least 15 times. Bank A offers $.10/debit card transaction, but no other requirements. About 33% of my expenses are fixed. Should I continue with bank A for fixed expenses or switch it? I just started this a couple weeks ago so still “in transition.”

    • Jen – if bank B offers 4% and it is where you want to grow your balance, then I’d encourage you to use bank B as your variable account. Your motivation will be to grow this account, and continue to save on your variable expenses. From your scenario that seems the most logical.

    • What bank are you getting 4% from?

      • Crystal – Our friends at Northpointe Bank offer a 5% checking account as of 1/6/2015 (this is unheard of right now). Best to you!

  3. What are the first steps I should take to set up account #2? Like split my paycheck in half amongst the two accounts? I get the big picture, but I’d really love to get your insight as to how to make the transition. I’m pushing 40 and I HATE living paycheck to paycheck. It’s ridiculous .

    • Hi Joe. So, we recommend that you add up all your fixed expenses first, then divide by 2. So, if you were making $3k/bi-weekly and had $1k in fixed expenses each month, you would put in $500 into your fixed when you get paid each time. And then in your variable acct, you’d put the remaining $2500 (just as an example). We also recommend a months worth of fixed expense cushion in your fixed exp account. We’re developing a class that will launch soon if this doesn’t make sense. Thanks for stopping by.

  4. Nice post. While I don’t have two checking accounts, I do have several savings accounts set up in ING, and just have money funneled their every month. One for stock investments, one for a vacation fund, and one for “one-off” expenses that tend to pop up every now and then. I then use my checking account as kind of the main hub, from which all these other accounts are funded. It works for me, and seems to be roughly the same idea behind yours.

  5. Great Savannah! Are you going to have these checking accounts at seperate banks? I setup my checking accounts at two seperate banks to keep this seperation. This is to make sure we have no single point of failure in terms of banks.

  6. I have had two checking accounts for years and it does help you not spend monies you don’t have. It was the only way to make sure all of our bills are paid on time. I haven’t paid a late fee in years. In my younger days I spent about 40.00 a MONTH in late fees and over drafts. And I felt like I was always robbing any savings that I had left to take care of that 40.00. Which meant I wasn’t saving a dime in my younger days. But the hubby had a mad fund I didn’t know about and he managed to save enough money for us to both retire early. We are not rich but we don’t have to worry about many bills now..we pay cash for everything.

  7. I don’t have two checking accounts, but I do have two savings accounts. One is my “regular” or “emergency fund” savings. The second is for taxes. I am self-employed, so if I’m not careful, it’s really easy to not set aside the 25-30% of my pay for the quarterly and April bills to the IRS.

    I’ve found the envelope system works well rather than two checking accounts. I take out the cash I need for the various spending categories of food, clothing, etc. and leave money in the checking for household bills and gas for the car. Helps that I’m single, but all the more reason I have to be vigilant about my spending – no one to blame but me.

  8. We have a “home checking” which is a joint which we each put a set dollar amount into each month that is used for the mortage and other fixed home expenses – it is also a “savings” account for any and all unexpected bills that come with home ownership – I LOVE IT! We do not ever have to worry about those bills!

    I need to set-up a personal one for the grocery, my personal student loans and other fixed expenses personally – I didn’t think of doing that until I read this article – on my list for this week :) THANKS!

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