Many individuals have multiple savings accounts depending on their savings goals, but often only have one checking account for transactions. We’ll review the benefits of having two checking shares to help you strategically manage your money.
With two checking shares, you can reduce the chance of mismanaging your funds by splitting your expenses into fixed vs. variable.
For instance, if your mortgage payment is $1,500 and your car payment is $250, you’ll have fixed monthly expenses of $1,750. You can set up a direct deposit for that amount into one checking share each month and you’ll have the exact amount you need to cover these costs.
You can have the remaining balance of your direct deposit sent to your second checking share and use it for your variable expenses, like groceries, gas, and miscellaneous expenses. By splitting your shares by expense type, you’ll reduce the risk of overspending and not having enough funds to cover your fixed expenses.
If you’re an entrepreneur or working a side hustle, having separate checking shares can help you keep your business-related expenses organized. Costs like shipping, office supplies, and even gas for business-related travel can be kept in a checking share that’s separate from your personal expenses. You’ll want to use the second checking share for any income you make, too. When it comes time to file taxes, you’ll have a detailed transaction history of any money coming in or going out that’s related to your business. This will eliminate the need to sift through personal and business expenses for reporting purposes.
If you have expenses that occur infrequently, like quarterly taxes or veterinary bills, you may want to stash your cash for these expenses in a separate checking share. You’ll be able to add funds to the account as needed, but it won’t interfere with your daily or monthly spending. When it becomes time to spend the money in the account, you can use a separate debit card for the transactions and pull directly from that share.
If you and your partner are combining finances, consider having a separate checking share for each person’s individual expenses and a second checking share for joint expenses. Each individual can transfer cash directly into the joint account and the funds can be used for any predetermined joint expenses or emergencies that crop up. Meanwhile, you’ll have a separate account for your personal spending, like lunches out or gifts for your significant other.
You may think that having a second checking share would be a burden, but there are multiple benefits to separating your transactions. With our free checking accounts, you can customize your checking shares to fit your needs and keep yourself organized. For more financial tips and tools, visit our WalletWorks page.