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Sounding like a broken record, a personal budget is one of the key personal finance tips that anyone with any sense should adhere to. It is the key to getting your bank accounts in order. Needless to say, personal budgets are important, but they can only go so far in life. How far? Up until a family is involved.
While personal budgets help one person figure out their finances, the finances for a family require much more time and effort to get situated. While one person may require only two bank accounts, just know that a family needs more than that. Knowing what family accounts are necessary is key if a family budget is to be possible. With that being said, there are several very important bank accounts that a family needs; here are a few accounts to keep in mind.
Home Checking Account
This is the first destination for all sources of income. The home checking account is the tool used for paying bills such as mortgage payments, auto payments, utilities, and other regular expenses. You should try to find a checking account that offers online banking benefits. This makes paying bills much easier. After those are dealt with, a better picture of the available finances is painted. Just to recap, the benefits are two-fold: bills are dealt with more easily and the remaining funds can be redirected more easily.
Family Emergency Savings Account
Any sort of budget includes an emergency savings account. These are crucial for tackling unexpected hospital or emergency services. The best practice is to constantly build this fund with every pay check. It is up to the budgeter, but a good rule of thumb is anywhere between 15% and 20% of income. This money should sit and collect interest until called upon. You should work to find a high earning savings account with low fees.
Spouse Checking Accounts
There should be two accounts for each spouse in the family. There are various purposes for these accounts. They can account for random frivolous spending such as going out to lunch one day at work, or this money can go towards groceries for the next couple weeks. It generally has to do with necessary purchases coupled with some small frivolous spending. It is extremely important to emphasize that important things come first.
Health Savings Account
This is different than an emergency savings account. In addition to random hospital expenses or emergency room visits, there are plenty of regular health care expenses for a family. This fund is meant to accommodate spending on dentist appointments, routine doctor visits, and more. Just enough needs to be transferred each month to pay for these visits, so it is best to calculate out just how much these routine visits costs.
This is probably the only account with the least pertinence, but it is no less important to some people. While priority should be lower, some funds can be devoted to the fun account for fun. There can be a couple ways of going about this. Saving up over time for vacations is an example of a long term fun account. Saving up each week for the weekend is an example of a short term application of the fun account.
Author: Jeff Gitlen