Personal bank accounts are often overlooked. What we mean is: we rarely see clients categorize their spending and miss out on creating valuable sub-accounts to organize their dreams into a reality.
Unfortunately, it’s certainly not something taught at schools or even recommended by many professionals.
But your bank account can be the origin of plentiful financial blessings.
You just have to organize it!
The way you structure it may not seem important at first. But having your personal finances organized actually clarifies your long term goals.
It may not be as glamorous as winning the lottery, but it’s a surefire way to achieve financial wellness for your future self & family.
Why Is The Structure Of Your Personal Bank Account Important?
First of all, what do we mean when we say structure of your personal bank account?
What we mean is: what are the sub-accounts within your bank account looking like?
Do you have a spending account? Rainy day fund? Nest egg? A sinking fund for that European trip you’ve always wanted to go on?
Categorizing your finances with strategies not only saves you money, but also gives you a bird’s eye view of your finances.
(P.S. This significantly reduces stress from not knowing where your money is going!)
So, to help you out we’ve listed two of the most popular ways to structure your bank account:
First Up: Your Very Own Bucket Strategy
A Quick Description
A bucket strategy will have you organize your finances into several sub-accounts to better control your spending.
It is simply divvying up your finances into metaphorical buckets to give them a purpose.
You will create sub accounts for your most common expenses and savings goals, such as:
- Grocery account
- Petrol account
- Personal spend
- Travel fund
- Home deposit
Advantage: A bucket strategy gives you a crystal clear view on how much you spend per expense, and how long it will take you to reach your savings goals.
It is also a good safeguard against accidentally spending your savings goal money, as it will be in an entirely different account.
Disadvantage: It may be hard at first for you to prioritize your goals, as a bucket strategy makes you realize how much money is spent on bills.
How Can I Sink My Way To A Better Future?
A Quick Description:
A sinking fund is simply a savings account with a specific goal.
It is created with the intent of paying off said goal’s cost within an expected timeline.
Although this strategy is typically used by companies & body corp, you can use it yourself, too.
For example: If you calculate a new car will cost you fifteen thousand dollars, you can create a sinking fund into which you & your partner will deposit three hundred dollars weekly.
You’ll have your car in just under a year!
Advantage: A sinking fund strategy will help you realize your goals and make them become a reality. It will also give you a realistic understanding of when you can achieve your savings goals.
Disadvantage: Once you deposit your money into the sinking fund, it is highly advisable to not touch it again until the fund’s goal is completed.
This means you won’t be able to use that money for anything else, although it may become tempting to touch it when large amounts are saved up.
Gain Hundreds More Valuable Strategies With An A Firm Accountant
A sinking fund or bucket strategy can absolutely help you grow your personal finances and help you hit your savings goals sooner than expected. The best part is they can be used together!
The next step you’ll want to take to grow your personal savings and afford more holidays is to contact a qualified account.