Nov 24th, 2008
Emergency Account, Budgeted Expense Account, and Standard Account
We’ve talked about having an emergency fund before; to some extent we’ve talked about budgeting for expenses. There are also standard expenses, things we pay for every day. For me, in addition to having separate funds, I also have separate accounts for all of these.
My emergency fund, which I’m going to need to tap soon, is at iGoBanking.com. This is a true online bank; no checks, but online transfer options galore. The interest there was the highest I could find when I started, and now pays 3.28%; as usual (just like all my other bank accounts), it’s FDIC insured–not that I have anywhere close to $100,000, let alone $250,000, in there.
My budgeted expense account, where I send in a certain amount of money twice a month for regular expenses like mortgage, insurance, vehicle registration, and memberships, gets a lot of action; it’s in a Capital One Direct account. This has an ATM card (which I’ve never used) and checks (which I do use, although there is a limit on how many checks I can write a month) as well as online transfers. I can also send in deposits in prepaid envelopes, which I like. It pays 2.98% interest, which is less than the iGoBanking.com account, but the check writing makes it more flexible (as you may be able to tell, while I can get my money in a couple days with the iGoBanking.com account–the emergency one–a couple of days can be a real issue).
Finally, my standard, everyday account is at a local bank. I’ve had it since college at a bank my mom is a retiree of. It pays no interest, but I keep it there due to its accessibility and the fact it’s linked with my mother’s accounts in the event she needs money urgently. The local ATMs and branches are an advantage, and they recently opened one branch in a supermarket that’s seven days a week. It has limited online banking as well.
Having multiple funds is a given; having multiple accounts helps me to keep my banking situation straight on paper as well as in my head. This might be a concept worth trying if you, like me, need help keeping your money separated physically as well as mentally.
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