how many accounts should i have

I am going to start off by admitting I may be a hoarder in this category. [Tidbit about me, I love to get rid of things via donation, recycling, etc. I am a minimalist. So to use the word hoarder hurt my soul a little bit].

The point, you may want to start with these suggestions and pare the accounts down to what fits your style.


For starters, as a freelancer, make sure you have at least two checking accounts. One for your personal use and one for your business use. The IRS would have a field day of making you go through your personal bank account with a fine-tooth comb if you ever had an audit. So, that’s rule number one: two checking accounts. You will need to deposit any and all money you receive as payment into the business account (whether that is direct deposit, check, or cash).


Here comes savings account #1: Taxes

When you get your payment, the rule of thumb in the freelance world is to put 30% of that into your tax account… immediately.

[Note: you may or may not need to save more than the 30% rule of thumb - your tax

accountant can give you a more exact number based on if you

have any W2 income within your household, etc.]


Savings account #2: Recurring Items

These are what I discussed in a previous blog post. If you haven’t read it yet, check that out here. This one can be a lifesaver!

Savings account #3: Emergency Fund

I will go into depth about emergency funds in a later post, but for quick reference, you should have six (6) months of spending set aside for emergency situations if you're the solo income earner of the family. If you didn’t believe in this concept before, I have to assume the COVID-19 pandemic showed you exactly why this is a must.


Savings account #4: General savings

This is where you can put money away for whatever it is you’re saving for: vacation, new-to-you vehicle, (Pro Tip… buy a used car instead of a new one. Did you know that new cars lose approximately 20% of their value in the first year of ownership?), furniture… you get the idea.


Now, before you go and open all these accounts, make sure your bank allows you to do so for free. There is no sense in having them if you have to pay for it. Another thing to know when opening several savings accounts is that there is a limit to how many times you can transfer money OUT. The current rule is six times (Rule is known as Regulation D established by the Federal Reserve -- *this rule has been lifted during COVID times*). You can transfer IN all you want!


If you aren’t allowed multiple accounts, here’s my suggestion.

Every time money enters/exits the account, change the transaction memo to read:

Taxes: $650

Car Sav: $1,100

This way, you at least know how much you have in each category. It will look like this on your banking website or statement:


Description Memo Amount Balance

Transfer out to Ck Act ### Taxes: $650 -120.00 1,560.00

Transfer into Sav Act #### Car Sav: $1,100 400.00 1,680.00


And this my friends is how to set up your bank accounts for success.


Here’s to you!

~Melissa


#budgeting #budgetingtips #budgeterswin #freelancerlife #freelancing

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