How to Separate Bank Accounts for Budgeting | Ultimate Guide

The best way to better handle your money is to separate bank accounts for budgeting. That is, you set up automatic transfers to move funds from where they are deposited to various checking, savings and spending accounts.

In distilling your accounts, you need to set up an automatic transfer to send your profits to; ‘fixed expenses’ account(s); savings account(s), to your spending account.

By ‘fixed expenses’, I mean ‘obligatory/mandatory’ expenses like bills, house repairs, car fixing, etc.

This post will show you just how to separate bank accounts for budgeting in 2023. You will also learn how to set up your checking and savings accounts to help you pay your bills on time, save money every month, and spend money on buying what you need (and want).

You’re in for a money-budgeting masterclass.

Why Should I Budget?

Rich folks know this so well. You should budget, “so you can build wealth, get rich, learn how to sustain same, etc.”

Apparently, everyone is searching for the golden ticket to wealth, while the secret lives with us every day. Problem is, we really do not bother with the “doing” part, because we are acquiesced with the traditional way of using money; Spend as you earn!

Sadly too, this conventional approach has helped no one grow rich it has simply made growing rich a mirage.

To succeed perfectly at managing your money, you will need separate bank accounts for budgeting.

Why do I need multiple bank accounts?

The idea of multiple bank accounts easily sounds ‘messy’. It feels like it will just complicate things more. Oh well, it’s never really the case, it makes things a lot simpler!

The secret to successful budgeting is getting several bank accounts. This strategy is the same as letting someone else handle your cash. Be your own money manager by coordinating your bank accounts and your budget.

Unlike conventional banking where all the money is pooled together by getting one checking account and on a savings account; multiple bank accounts help you split your money into various buckets that are easily distinguishable.

The regular traditional two-accounts-only can get convoluted with more money. Let’s say, you are on your weekend get-away at the beach and suddenly have to touch your home-maintenance money to spice the mood up a little, just because it was sitting in the same account and whoops, your washing machine just broke a day before. Oh! Dang it!

Now imagine if all that money was all split up into several accounts?! It is painfully clear that having several accounts enables you stay aware of and on guard with what each account represents and why you cannot just spend same on whatever else. No errors! As we like to hear, “easy peasy, lemon squeezy”.

Also, to sustain and maintain your multiple account, give a name to every bank account; so you know at a quick glance that you have $567 for home repairs and $723 in your holiday fund, etc. This way, there’s no messing up certain numbers or being confused over what every single dollar is for.

Another explanation is that particular banks can collapse or can contribute to the closure of some catastrophic events. MarketWatch spoke about recent incidences where this has occurred and left people floundering.

What are the advantages of having multiple bank accounts?

Multiple bank accounts enable you quickly discern what each dollar is for. It helps you progress towards your major aim; building wealth. It is really motivating to see yourself progress toward your objectives!

There’s no reason to feel bad about spending money, feelings of remorse for spending money on frivolous or luxurious things, such as a holiday, are one issue many people run into. Budgeting via multiple accounts establishes borders and the right to spend.

When you know your emergency fund is worth $15,000, and you have $745 in your home or car repair fund. You are cloaked! Spend the cash!

On the flip side, having several accounts ensure you are internally obligated to use the money for its intended target(s).

If further helps you discipline your spending habits. Knowing you have to ‘fund’ all your accounts will spur you to curtail impulsive buying. Learn to budget your spending.

Organize Your Bank Accounts in 3 Easy Steps–Fixed, Savings, and Variable Expenses

After you have developed a balanced budget for your finances, by grouping your bank accounts into three categories; fixed, investments, and variable expenditures, it’s time to put the budget into motion.

Step 1: Budget Your Money into Fixed, Savings, and Variable Expenses.

It can be as easy or as hard as you want it to be to learn how to manage your money with fixed, investments, and variable expenses.

Grab your budget and 3 different colored highlighters, and run through your budget line by line. Choose one fixed cost color, savings cost color, and variable expense color.

When you’re done categorizing, then you’re ready for step two.

Step 2: how to handle money and arrange bank accounts.

After it has highlighted your budget, it’s time to learn how to arrange your bank accounts so that you can efficiently manage your money.

The best way to set up your bank accounts is having one bank account for fixed costs, one savings account to save you some money, and one checking account for discretionary costs.

Let’s do this; take out your calculator and sum up your estimate for each of the said three categories of accounts.

The sum for your fixed expenses will tell you how much money you need to have per month in your bank account for “fixed expenses” in order to pay all your bills.

The amount of your savings tells you how much per month you can save for your goals and the amount for the checking account helps you to be prepared for unusual costs, emergencies, and maybe, health care.

The variable budget amount left after your appropriation is how much money you have to spend in a month.

That established, you’re ready for step 3 consequently.

SEE ALSO: 10 Proven Ways To Handle Unexpected Expenses In 2023

Finally, Step 3: Ways to Budget and Save with Multiple Savings or Checking Accounts

You should allocate money for expenses, for investments, and what you have left for ‘spendable cash’.

Having several accounts can be a lot instead of putting it all into one large savings account, simply set up automatic transfers to move your money into the different savings accounts.

The same goes with the money you’re investing. If you want to split your spending money into various categories, such as food, gas, or clothing, you can do that.

However, be mindful that you might pay additional bank fees for several checking accounts. So it is better to take out the cash every payday split it into envelopes or jars.

How to Separate Bank Accounts for Budgeting in 2023

1. Locate your bank

If it satisfy you with your current bank, then search online to see if (almost all banks do!) they support multiple accounts.

The most important thing, then, is to see what their fee structure and minimum criteria for balance are. It’s time to look for a new bank (or a local credit union) if they’re paying per account. Don’t set up a perfect system with a sumptuous framework. That defeats the goal and the advantages.

Google banks for options in your area and place a call to the branch. That can typically be quicker than digging through the gobs of online data. Or, with an online bank (usually lower fees than brick & mortar banks), you are good to go.

2. Have a primary checking account

As the first move, this will be where all your money flows in.

3. Write out your financial priorities

You need to recognize your priorities besides your must-have accounts and help those goals with the funds required to make them a reality!

Accounts Must have:

  • Key inspection
  • Fund for Emergencies
  • Home repair fund
  • Car repair fund for cars
  • Accounts optional:
  • Holiday fund
  • Personal fund for splurge
  • Kiddo Fund
  • Fund for pet treatment
  • New Car / House Fund

Cons of Multiple Bank Accounts

You don’t need a supermarket account, one for car payments, one for car maintenance, one for spending on birthdays and one for spending on clothing, and so on.

Use the multiple bank accounts method, but not by opening 20 accounts. Don’t misuse it please. That is superfluous and a waste of time. Mind you, you want this to be simpler, not more difficult.

Thus, you can use cash envelopes instead, if you need more ‘side’ accounts. For smaller sinking funds, like family reunion spending, you can use cash envelopes, which you can limit to $650 for anything.

Then Pitfall # 2-Happy Move

Keeping it easy is the secret to using these accounts. Don’t go nuts moving money many times back and forth. It would be complicated, a waste of time, and your bank could charge you a fee for too much operation.

For this system, don’t use savings accounts. Regulation D, Cap 6 of the Federal Law; has limited how many transactions you can do in & out of a savings account free every month. This applies to savings accounts of all banks.

The idea is to set automatic transfers to move all funds into intended accounts.


Having different bank accounts can be a big game-changer for your budgeting method! I strongly encourage you to try it and see how quickly your financial goals gain momentum!

It is hugely rewarding to see your success! However, make sure you do your research and find a bank or banks that match your savings appetite or do I say, ”savings capacity” now?


Leave a Reply
You May Also Like