How to Structure Your Bank and Investment Accounts

One of the things we are asked about constantly is how to structure your finances.  While there are many ways to do it here is one way that I have used pretty much my entire adult life.  Before that, I kept all my money, literally, in a piggy bank (yes, it looked like a pig and you had to break it open to get the money, although you could get some of the coins out of the little slot).  I read about this concept in a book called “Uncommon Cents” by none other than – Ben Franklin.  Yes, that is correct Ben Franklin.  Here’s how I did it.

Bank Account 1:  Our Checking – this account is where we pay our bills and day to day expenses.  I took, depending on the year and salary, most of my salary and put it in here.  I use Bank of America but any bank will do.  The money is FDIC protected.

Bank Account 2:  Her Checking – this account is for my wife when she was a full-time mom when the kids were little I took a fixed amount a month and put it in here.

Retirement Account: – This was our 401(K) or IRA.  The companies I worked for Keane, Fidelity Investments, Collaborative Consulting all used Fidelity as their provider so it was easy.  I put in 5 – 10% every pay period.  Investing constantly is key, in up and down markets.  More on retirement investment in other articles.

Personal Investment Account: – If we had any money left over, and sometimes we didn’t, I would put money in this account.  It served two important purposes; 1.  rainy day money.  This was in a money market account and was our emergency money.  2. personal investments – stock or other investments.  Note:  you can certainly separate out your rainy day account, most banks have a checking account and savings account.  You could use the savings account as your rainy day account if you want.  I tried this but over the years could get a better return on a money market fund.

That’s it, I have kept this system in place for many years and it’s worked for me.  The only changes I have made was to set up a couple of business accounts for my businesses.  Try it you’ll like it.  Any questions please don’t hesitate to contact us!  Happy savings!

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