When I was 10 years old, my parents gave me my first allowance, 3 boxes, and a deal. Each week I would receive an allowance worth my age in years (So at 10 I got $10 a week, at 11, $11. etc…). BUT I couldn’t just take the money and put it all in my wallet.
Each box represented a bank account: checking, savings, and long-term savings. I would choose a fixed amount to go in each box each week and I couldn’t transfer money unless it was absolutely necessary. It was a very simple method that taught me at an early age to save money and delay gratification (which we all know is not easy at any age).
This is the author’s method: Then, I came up with an ingenious solution: I took the old tactic of multiple savings accounts and twisted it—I opened multiple checking accounts.
|First, I figured out my monthly nut (more-or-less fixed expenses like rent, car payment, child care, etc.). Now I keep that amount in my main checking account, at Bank of America. That’s my bills account.|
|Next, I identified how much CASH I needed each month for variable expenses like groceries, diapers, Vanity Fair, gas, babysitters, and occasional cocktails with Ramit.|
I now transfer $200 a week (automated) from my checking account into a separate ING Direct account* with its own debit card. That’s myspending account.
Why it works: Now I can call up the balance in my spending account on my iPhone, and I know exactly how much money I can spend. And I never “accidentally” spend the money that’s meant for bills.
For savings, I automatically transfer $50 from checking into three different savings accountseach pay period so that I don’t overspend on clothes, gifts or travel.