Hit a Financial Homerun Setting Up Bank Accounts Like a Baseball Game
The days of stuffing your cash in a mattress or burying your gold out back are gone and over. Today’s modern family actually rarely sees physical cash anymore. With direct deposit paychecks and automatic transactions, there is rarely the handling of money (or checks, for that matter) anymore, and setting up bank accounts can actually be overwhelming.
This means that families are more and more relying on various bank accounts. And with all of these transactions whizzing through the ether, it’s challenging to stay on top of it all.
So, if you want to be really savvy and track your money diligently, consider opening several different bank accounts and setting them up like a game of America’s favorite pastime—baseball. Here’s how.
First base—rainy day savings. You can’t get anywhere, let alone cross home plate, without making it to first base. Your rainy day savings is your most critical bank account. You should try and have at least 6 months worth of expenses saved up here at all times. This is not an account you draw from when you want to go on a last minute vacation or have bills to pay. It’s for absolute emergencies only.
Second base—regular savings. After you’ve successfully reached first, you can charge onward to second. Second base, or your regular savings account, is like a “holding tank.” From here you’ll draw funds for minor financial situations, like when your furnace goes out or car breaks down. Try and keep an amount that would cover unforeseen expenditures. Then send the rest of your cash on to other savings, like an IRA, 401k, or retirement program.
Third base—medical account. Whether you fund your own insurance, have employer-sponsored health insurance, or an HSA, medical expenses are going to pop up here or there. You have to be able to cover deductibles, co-pays, coinsurances, and maximum out of pocket payments. Once you make it to third, get to know your specific medical plan and how much it would cost if your entire family maxed theirs out. Once you’ve crunched the numbers you’ll know how much you should keep in this account.
Home plate—checking account. View your checking account like home plate under the catcher’s glove. It receives all of the incoming paychecks and then determines where the ball goes around the field. Even if you’re not using checks, online transactions draw from this account. Make sure you have enough here to cover your monthly expenses. Anything over that needs to be distributed into other accounts to make sure your savings are solid.
Home run—fun fund. The bases are loaded. Your savings accounts are maxed out, you have paid off your debt, and your monthly expenditures are taken care of. Any money left over at this point can be deposited into a fun fund. It’s like hitting a homerun and sending all your players home, where you’ll celebrate your victory and start all over again next inning.
And just like a coach keeps track of his plays and team on his clipboard, you need stay on top of your accounts. If you open all of your accounts with one banking institution, you’ll most likely be given an online dashboard that displays all of your account information. If you have multiple accounts open with different banks, you can download apps like Mint that will connect to your account information and display it in one spot from the convenience of your mobile phone. With these steps, setting up bank accounts is easy.
Let’s play ball!