This afternoon, I received the following email from one of my readers:
I use an Excel Checkbook Sheet similar to yours for my checking and balance it easily every week. I am thinking of moving my everyday savings into my checking account because I earn a little more interest there. How do I keep track separately in the same account? Do I pretend it is not there and just keep my regular checking account balance?
On one hand, I agree with the reader that if absolutely must consolidate your checking and savings account, one simple way to manage them is to “pretend” that your “savings” are not actually there.
For example, if you had $500 in your checking account and $3000 in your savings account and you were convinced that consolidating these two accounts would make your life easier, then you could simply combine the accounts and carry the $500 in your checking account balance knowing that you still had an additional $3000 buffer in the account as well.
On the other hand, there are several reasons why I recommend maintaining seperate checking and savings accounts.
First, having seperate checking and savings accounts provides a psychological barrier to the temptation of spending your savings with the “easy access” of your everyday checkbook or ATM usage.
Second, you have the “redundancy” of having a separate account available in the event something were to happen to your checking account (identity theft, unauthorized withdrawals, bank errors, computer failures, etc.).
Third, if you shop around, you’ll likely find a savings account that offers a much better rate than any offered by a traditional checking account. Yes, interest rates are very low for savings right now, but analysts predict interest rates should start rising again by the middle to end of 2012.
Finally, having seperate savings and checking accounts is a much cleaner way of managing your finances. Yes it may take a little extra effort on your part to keep track of two separate accounts, but when you utilize an easy to use spreadsheet like the free one I created for the readers on this site, we’re talking maybe an extra 5 minutes a month!
For these reasons, I strongly recommend maintaining separate checking and savings accounts (at a minimum), in the long run, you’ll be happy you did!
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I see a tendency that people want to get more lazy. So what that you have to manage 2 accounts? It is not so difficult to do. I remember one guy said that using 2 accounts kept him away from debt! I’d suggest not to merge this accounts if you have tendency to spend money uncontrolled.