Consider Two Checking Accounts
I’ve just said you should consolidate counts wherever possible. Why would you want to turn around and add another checking account?
Several of my readers have told me they struck on this solution after having trouble figuring out how much money in their accounts was available for spending and how much had to be set aside for bills.
The mechanics of the dual checking account system are pretty straightforward. You total up your bills for an entire year, then divide that sum by the number of paychecks you expect to receive (12 if you’re paid monthly, 26 if you’re paid every other week, 24 if you’re paid twice a month and 52 if you’re paid weekly). That amount is transferred from your primary checking account to your “bill paying” checking account after every paycheck. (You can do the transfer manually, but I strongly recommend making this automatic.) You then set up your bills to be paid (again, preferably automatically) from this second account.
The money that’s left over in your primary account is available to spend on all your variable purchases, such as groceries, gas, clothing, and entertainment.
You should make sure you’re getting both checking accounts for free; otherwise, monthly service fees can add up quickly. Your bank may be willing to give you one account for free in exchange for using direct deposit, but may charge you for the second account. If that’s the case, you may want to check out the free accounts offered by the online banks mentioned earlier.