I’ve shared previously how when I was 18, I got a credit card, and I started spending, most of that mindlessly on discretionary expenses. I realized that’s a really ineffective way to manage your finances. The more complex your bank account structure is, the harder it is to control things.
Here is the bank account structure I recommend: Start with creating one account that pays all your fixed bills and another account that you use for your everyday spending. The daily spending account should be limited to the amount you roughly need per week. That way, you can stick to your goals with your spending and stay on target. The third type of account you need is your savings account. That’s where you’ll put money towards your goal, for example, a holiday.
Now, you’ll probably have credits cards too. I used my credit card once to pay for a holiday. This resulted in interest appearing on my credit card statement, and I hated seeing that. That was a pain point for me. I would start to feel stressed because I had to pay that interest because of my own impatience. I didn’t stick to the plan to save up before spending on something big.
Now, I’ll always make sure to save up enough money up front for a holiday. I’ve had clients do the same, and their experience was very positive. Once they had saved up the money, they could enjoy the holiday guilt-free. They could come back feeling fully refreshed.
So I’d like to ask you the question: How do you have your bank account structured? Let me know in the comments. I’ll have some great tips for you in the next post on how to set up your ideal structure.