When raising a family, it’s expected you’ll need to have steady and easy access to cash. Just as there are different needs when it comes to raising a family, there are also different bank accounts you’ll want to have to better ensure you don’t overspend or have to dig into accounts meant for other purposes. Learn more about the specific bank accounts every family needs to have to not only survive, but thrive.
A Basic Checking Account
You’ll need a checking account for your day-to-day expenses. The financial institution you choose for your checking account should have little to no fees. Know that there are plenty of banks and credit unions that offer free checking accounts if you opt to have your checks directly deposited into your account, making things that much easier.
Family Emergency Savings
Just like local insurance agents will tell you, the best time to prepare for an emergency is well before one happens. Open a family emergency savings account ASAP and make it a habit to deposit roughly 20 percent of your check into this account every time you get paid, or when you have extra cash on hand. With this account, you don’t want to withdraw any money from it unless it’s a dire emergency, one that will put you and your family out on the streets. Ideally, you’ll want enough money in this account to live off of for six to 12 months.
High Yield Savings Account
Besides emergency savings, you should also have a regular savings account. This is for expenses like buying a new car, home improvements and anything else that requires you to save up an abundance of money before making the purchase. It’s best that you open a high yield savings account so any money you deposit into it draws more interest while you’re building your financial reserves. If you know you’ll be tempted to access the funds before their time, consider opening the account with a bank other than the one currently hosting your checking account.
Health Savings Account
Even if you have health insurance, medical expenses can still be quite high. For that reason, it’s good to have supplementary reserves in the form of a health savings account. What’s unique about this account is it can only be used for hospitals, doctor’s and chiropractor’s offices, pharmacies and the like. Know that this account is tax-free. As for how much money you should have in this account, you’ll want at least enough to cover any medical expenses you might incur over the course of a year.
Depending on how big your family is, Christmas can become a major expense as well as a major headache if you aren’t financially prepared. Put back anywhere from $25 to $50 dollars every paycheck or every other paycheck into this account. In addition to buying gifts, this money can also be used for plane tickets to visit family over the holidays, holiday decorations, Christmas dinner and the like. You’re sure to appreciate having this account rather than having to scrimp and scrounge and potentially having to dig into your emergency account to cover your holiday expenses.
While it can be a challenge sorting your money into so many different accounts each pay period, you’re sure to thank yourself. Start out with one or two accounts and build from there until you’ve got all your savings ducks in a row.