Firstly, today is the day when I officially became a registered sole trader, bought a domain and really started my journey.
Now, the topic of today- bank accounts. I personally have 10 different bank accounts, which may seem like a lot, especially if you are used to having only one or two. However, each one has a good reason and a specific purpose behind them. Below I go through each one and at the end are exemplars of the spreadsheets I use to keep track of them all.
But before that let me explain how I classify the different accounts into different categories, depending on what the money is to be used for. I have four different categories- savings, quick access, backup and no access. Savings is pretty straight forward, it is the money you have in any savings account, most likely the one with the highest interest rate your bank offers outside of a term deposit. There should be some barrier stopping/disincentivising you from taking money out, but it should still be accessible. Quick access accounts are the ones which you use for your everyday expenses. Backup accounts are the ones which are easier to access than savings, but you still don't want to be taking money out regularly. No access accounts are term deposits or shared accounts where you can't access the money easily.
Main- This is my main account which I use for every day and miscellaneous spending.
Flat- I like to have about two weeks worth of rent/power/internet in this account at all times for backup, but it is down to your individual circumstances. This just ensures that I won't accidentally spend all my money and be unable to pay rent.
Transfer- I use this account as a holding account, having the exact amount in it that I need to pay off my credit card. Anytime I spend using your credit card, I make sure top this account up. When my credit card bill comes through, I use this account to pay it off.
Savings- This is my main savings account and should earn a reasonable amount of interest. I use a goal that I wish to save towards- a car, house, holiday, etc.- to help keep on track.
Set a percentage of your income to put into this on a regular basis and try your best not to touch it.
Term Deposit- Term deposits often have the highest interest you can get from a bank as so are one of the safest ways to grow your money.
The drawbacks are that they often require a minimum amount to open and you cannot access the money until the end of the term.
Investment- This is an optional savings account. I use this for saving up money I plan to use for investing to allow me to invest in lump sums.
Credit Card- You may not have a credit card and you may be wary of getting one, I was too. However, I would recommend getting one with a low limit and low fees (students can often get good deals) and only using it sparingly to build up your credit score. As soon as you use it, you should put an equivalent amount into your 'Transfer' account.
KiwiSaver- In New Zealand, this is the name for our retirement savings, similar to superannuation or a 401k. You may or may not have this provided by your bank.
Flat Account- I live in a flat, thus I have a shared bank account with my flatmates (roommates) that we contribute to regularly.
Now then, here are a couple of example spreadsheets, similar to what I use to keep track of my accounts. The first one is a basic one which I can provide free of charge. The second one includes charts showing the relative amounts you have in each account/category and one that shows your accounts over time.
