Image by Dmitry Demidko

Benefits of Owning Multiple Accounts

Take a moment to gather your thoughts on what bank accounts you have open and why you own them. Money can be subjective and objective at the same time, this nature can make us vulnerable to poor management. We unconsciously tag them as money for the college, vacation, seed money for investing and so on. While this is a good start, we need to build a proper infrastructure for our money to thrive in.

Here's a list of all accounts that are available to most individuals today:


Short-term:

- Chequing

- Credit

Long-term:

- Savings

- Long-term loan

- Investment (registered and non-registered)

A chequing or credit account is where you would have most of your cash outflows. Ideally, you should have more than one to keep track of your outflows more efficiently. For ex. I primarily use my main chequing account for essential spending like rents and utilities, and I keep a separate shared account with my significant other for groceries and dine outs. For discretionary spending, I use my credit card - this allows me to have complete transparency on how much and what I spend for my 'wants'. Once you have the accounts setup this way, you will be able to link your expense items with a designated account, allowing you to track your budget in a more efficient manner.

When you have excess income, you should allocate these funds to your long-term accounts like savings or investments. If you have a line of credit, mortgage, or student loan account, you may want to pay them off first. Ideally, you should limit the funds allocated to a high interest savings account up to 3 months' worth of your expenses as your emergency fund. Any excess funds should be put into your investments account to make them work for you.