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The Two Checking Account Strategy

Posted on October 19, 2011 in Planning

I have often recommended clients struggling with cash flow to use a cash flow and cash reserve savings strategy that incorporates simply setting up a second checking account. It seems that by adding extra steps to accessing money, some people end up leaving accounts alone. Inevitably this “laziness” leads to a growing cash reserve. Here is how it works:

Open a free checking account (use if you need some guidance) with a bank different from the one you are currently using.

Ask your HR or Payroll Dept at work for whatever form they use to update your direct deposit information. Add your new account to your direct deposit for $100 (fee free to go higher) each pay period. The rest will continue to go to your current account. If you are married, have your spouse set up the same deposit.

When you receive your debit card and checks for this new account, lock them in a firebox or closet at home.

Increase your direct deposit amount by $25 each quarter.

The good thing is your money is there if you really need it but it’s not just one click of your mouse or one swipe of your debit card away.


Matthew B. Brock, CFP®
Owner, Financial Planner