Managing your money can feel like a daunting task if you don’t know how to keep on track of your finances.
But one TikTok user claims she knows exactly how many bank accounts you should have to reach your money goals and pay all your bills on time.
Budgeting expert Ellyce Fulmore, who runs a life and money coaching website, says the ideal number of bank accounts you should have is four.
This is made up of a bill paying account, daily spending account, short-term savings account and a long-term investment account.
Starting her video, Ellyce, who is based in the US, says: “Raise your hand if you have one bank account where all of your bills come out of and is also linked to a debit card that you use for your daily spending.”
She continues: “You’re somehow left trying to do the mental math every single month to figure out how you’re going to pay that bill, and you end up overspending and dipping into your savings or putting stuff on your credit card that you really can’t afford.”
Your first account Ellyce recommends, your bill paying account, is pretty self-explanatory - this will be where all your money for your bills goes into.
Ellyce also suggested automating all of your payments to avoid any late fees or forgetting to pay a bill.
Your second account should be for daily spending, which is where your money for everyday activities should go.
For example, this could be where you spend on clothes, going out to eat, and other things you might do for fun.
Your daily spending account can be a second bank account with your regular bank, says Ellyce.
Next up, Ellyce suggests setting up an account for your short-term savings - basically anything you’re looking to buy in the next five years.
This could be for a big holiday or for a house deposit, but whatever your goal, Ellyce recommends putting this money in a high-interest account.
This is because you’ll maximise the amount of money you end up with, giving your savings the best chance to grow.
Your short-term savings can also be used as an emergency buffer if something goes wrong in your life, such as an appliance breaking down.
Finally, the last account Ellyce recommends opening is for your long-term investments.
This could be for investing in stocks and shares, or other commodities such as antiques, property and businesses.
Of course, you should always keep in mind that investing can be risky, as your money isn’t guaranteed to grow and you could end up with less than what you started if your investment dips.
Always do your research first before deciding to invest.
Ellyce talks about using a 401K which is a retirement savings account only available in the US.
