I have four bank accounts with two different banks.

I was still in college when I decided to open a new bank account in the same bank as my first account that I’ve had since I was in high school. When I told this decision to my dad, he immediately accompanied me to the bank.

To my surprise, the banker told me that it wasn’t such a good idea, at least not for my age. After all, 18-year-olds didn’t need to have multiple bank accounts, she said. I should stick with just one so that I wouldn’t be confused. However, I insisted, and she relented, so that was how I first got my second bank account.

Despite what the teller at the bank said, I still think it’s good to have multiple bank accounts, if you can handle it. It can get confusing for some, but for those who can properly manage it, having multiple bank accounts is like having an envelope system of managing money—except it’s all automated.

You’re probably wondering, what are these four bank accounts that I keep and why do I keep them?

1. the spending account

My first bank account is what I call my ‘spending account’. This is actually where I receive my salary, as well as my earnings from all my online gigs and ventures. This is the account where all my money first lands in. From here, I budget all my money. I withdraw some to keep as cash, while I transfer the majority to my other bank accounts that all serve different purposes.

This account of mine has no maintaining balance, which means it doesn’t close even if I only have cents in it. This is important because it gets emptied out fairly often – about monthly, yes.

2. the fun expenses account

I am not a fan of impulsive purchases, at least for items that cost more than $20. I believe in the saying, “wait before you buy”. Occasionally, I slip up and give in to temptation. But most of the time, I plan every little expense that I am going to make. The ‘fun expenses account’ helps me tremendously with that in two ways.

  • If I find something I like, I don’t buy it immediately. I instead transfer the money I’m supposed to buy it with from my ‘spending account’ to my ‘fun expenses account’. I wait for a day or two, or sometimes even longer if the purchase is particularly big, and then reassess whether I still want the item or not. It’s amazing how fast your want for an item can disappear in just a day. You may even realize, “hey, I don’t need this item after all.”
  • If I do want to make an impulsive purchase (“Oh my goodness, a Hello Kitty toothbrush!? Where else am I going to find this!?”) I make sure to get the money only from my ‘fun expenses account’. Even my travel fund is taken from this account, as one of my biggest impulse purchases is plane tickets.

Basically, the ‘fun expenses account’ allows you to spend your hard-earned money without making you feel guilty. And we all need that, don’t we?

3. the emergency fund account

This account, as the name implies, is for my emergency fund. I don’t touch this account anymore, not even to add to it, because I just use it to keep 6 months’ worth of my salary in case of an emergency.

Now, I’ve already written why it’s important to have an emergency fund, even if you’re young and single and can still depend on your parents. It gets even more important if you’re living paycheck to paycheck and have no other means of income.

In my opinion, aside from debts or student loans, this should be the first thing a young adult should be tackling the moment they get their first job. With the instability of today’s economy, who knows when you’re going to lose your job, right? Or heck, even if you do have a job, who knows when you’re going to get into an accident, or perhaps fall ill? These kinds of emergencies can put a dent in anyone’s pockets, but the emergency fund could soften the blow. It’s better to be safe than sorry, after all.

It’s important not to touch this account at all costs unless it’s a real emergency. And no, my dear millennial, that 50% sale at your favorite clothing store downtown is NOT an emergency.

4. the savings account

I have to be honest with you, at my age, I don’t know exactly what I’m using this savings account for. Yet I still consistently put 20% of my total income in this account every single month, because I believe in its importance.

Think of all the purchases you want to make in the future. Do you want your own house? A brand new car? If you’re not yet married, perhaps a grand wedding? You could use this savings account to save up for all those!

In my case, I’m not really saving up for anything in particular, but I still save for the future. I’m not yet in a hurry to buy a house of my own, I’m already happy with my car, and I don’t plan to get married until I’m in my 30’s, (which is still a few years down the road) so right now, I’m treating this account as an extension of my emergency fund.

It’s important to have a separate savings account, no matter what your reason may be. Or in my case, even if you don’t have a particular reason for saving yet.

What about you? Do you have multiple bank accounts too? Or do you perhaps just have one? Which do you think is better? Feel free to share your thoughts in the comments below!