(3 minute read)
Many financial experts have observed that one of the wisest actions you can take is to organize your money into multiple accounts. The purpose of this article is to reveal the advantages and disadvantages of the multiple account system, examine why most people do not open multiple accounts, and to introduce you to a hybrid solution which you may not have considered.
The Benefits
Meet Your Financial Goals
The primary objective in organizing your money into multiple accounts is to guarantee that as income comes in the door all of your financial goals are being met simultaneously. The concept of multiple accounts allows you to set aside a percentage of each incoming dollar toward such things as fixed expenses, variable expenses, vacations, clothing, entertainment, debt reduction, emergency fund or retirement, etc.
You Dictate Priorities
The very existence of multiple accounts significantly increases the likelihood that your income will end up in the right places, as deliberately and intentionally prioritized by you. This pays immediate dividends because if your income has not been specifically prioritized, the temptation to throw it into the ever blazing furnace of expenses will be too great. Your expenses will inevitably eat up every dollar of income you earn, if you allow them to.
Fosters Discipline
The creation of dedicated accounts facilitates the exercise of discipline. Your dedicated accounts are ever present reminders that there is significantly more to be gained than just paying the immediate bills.
Replaces Budgeting
Organizing your money with the multiple account system also replaces the necessity of creating a budget, as every dollar takes refuge in one of your specific accounts. The beauty is that your budgeting process now takes place in real time, with real money that is already sitting in your checking account, rather than speculatively in advance on a spreadsheet. Most importantly, the system intuitively encourages you to live within your budget.
Built In Savings Plan
Multiple accounts can also serve as a built in savings plan for both long term and short term savings goals. As income is received, the next step in the process naturally provokes the question: what percentage, if any, of each dollar just earned will be set aside in a savings account.
Prioritize What Matters Most To You
If you want to prioritize taking a vacation the creation of a dedicated “vacation” account to facilitate that markedly increases the likelihood that it will actually happen. Think about it, if you build a vacation savings plan into your routine personal finance system, then either it gets deposited with regularity, or it quickly becomes apparent that you are intentionally neglecting it.
Debt Reduction
A multiple account system also lends itself to the facilitation of debt reduction, as you can create custom accounts dedicated to each of your specific debt obligations.
Automation
The creation of multiple accounts builds automation into your personal finance system. For example, if you set up 7 different accounts, each with its own unique financial objective, then each time you get paid, all 7 accounts are mindfully considered as potential candidates for deposit, automating your spending priorities as a matter of routine practice.
Waste Reduction
Finally, the mindful and deliberate allocation of each dollar earned significantly increases the likelihood that those dollars will not be wasted.
The Challenges
Cumbersome System
Organizing your money in multiple accounts is not without its challenges. The most obvious concern is that having multiple accounts encumbers your personal finance management with many new details, such as the issuance of new log-in credentials and passwords to remember, as well as multiple account numbers to keep track of. Each new account is issued its own debit card, which can be an additional bookkeeping burden.
Fees & Minimum Balances
New accounts require maintenance, such as keeping track of minimum balance requirements. An increase in the number of accounts oftentimes translates into more banking fees. Those accounts which remain relatively inactive may also be penalized for their dormant status.
Transfer Headaches
Managing the transfers between the various accounts can be a burdensome headache.
Increased Fraud Risk
Additionally, more accounts signifies potentially more security risks for fraud or cyber attack.
Credit Card Complexity
Finally, many people utilize credit cards as their primary means of spending. If you are utilizing multiple bank accounts, it can be very difficult to keep track of which specific bank account(s) will cover the various credit card charges, especially so if there is only a single credit card payment each month.
A New Solution
Virtual Buckets
The good news is that the multiple account system can now be managed by means of virtual buckets with TrueView. How this works is that our customers continue to maintain a singular checking account and/or savings account, but create virtual accounts, or buckets, in order to benefit from the multiple account system.
Find Your Custom Sweet Spot
The virtual bucket system lends itself exceptionally well to experimentation for each individual, in order to discover their custom sweet spot. In fact, there is no penalty for experimentation, only the upside that comes with gaining additional insight from micro-managing your personal finances in accordance with your own priorities. The more you experiment, the more knowledge and information you glean.
Exceptionally Versatile & Nimble
As circumstances change, such as new debt obligations, new savings priorities, new expenses, or a new emphasis upon an emergency fund, the virtual bucket system can, instantaneously, be finely tuned, refined, or dramatically altered to meet your needs. The versatility and creativity that the virtual bucket system offers cannot be overstated. For example, the 2024 virtual bucket system currently in use by an individual may be quite different from the bucket system which they utilized in 2023. And when additional change inevitably occurs in 2025, the bucket system is ready for immediate adaptation.
Ready Made Solution
TrueView offers a very simple money system based upon the virtual bucket system. Moreover, all of our virtual buckets are synched together with a credit card tracker and a credit card payoff bucket. No matter how many buckets or credit cards you utilize to manage your finances, all of those moving parts are merged into a singular true view so you always know how much money you have and precisely what its for. The credit card payoff bucket updates in real time, regardless of the number of cards being used, so that you are never blindsided by your statement. We built a system that allows you to take full advantage of the multiple accounts concept, while simultaneously preserving the liberties and benefits afforded by using your preferred credit card(s).
Simplify & Systematize
Our mission is to simplify and systematize your personal finances with our automated features. We invite you to give our system a free trial. There is no need to switch banks, or credit cards, TrueView meets you right where you are. Our system sits on top of your existing finances, regardless of their current condition. TrueView will open your eyes to a flood of benefits and place you in command of your finances. Our experience indicates that if you do not take control of your finances, they will inevitably take control of you. Allow us to transform your checking account into a simple money system.
