The Basic Accounts

It occurs to the other day that I have yet to ever really discuss how I handle my day to day financial stuff. So in the interest of seeing if anyone else has any great ideas I’m going to lay out where I have the accounts and what I use them for.

  1. The Chequing Account – This is the heart of my account system. All deposits start in this account and from here are moved around as required and all bills are paid out of this account automatically.
  2. The High Interest Savings Account – If you still have a regular savings account it is time to get over it and move on. There is no reason to have any cash sitting in a regular savings account when there are so many higher interest rate accounts available today. Any cash I won’t be using in under 30 days is moved into this account to collect interest in the mean time.
  3. Retirement Accounts – Depending on your own situation you might require up to three of these: one for regular RRSP, one for Lock In RRSP (for old company pension) and one with your current company pension.  You might actually have more accounts, but in reality you usually don’t require them.
  4. Trading Accounts – I’m referring here to a taxable trading account. Some investments just get you more money in a taxable account. For example, dividend paying stocks should be held here rather than a RRSP, since you will likely pay less tax on the dividend income overall in a taxable account.
  5. Special Accounts – At times you will need another account than the above, such as an RESP to save for your child’s education.
  6. Credit accounts – I like to keep these to a minimum, so I keep just one credit card and one line of credit.

The purpose of the above accounts revolve around the concept of KISS (keep it simple stupid).  Unlike my filing system this system is fairly well developed.  I’ve had more accounts in the past, but in time I merged them together down to this basic set to make things easier on myself.  The basic idea of this is to let me review all my accounts in about 15 minutes.  Also the reduced number of accounts reduces paperwork.

So how do you handle your basic accounts?  If you have a better idea, please share.

3 thoughts on “The Basic Accounts”

  1. My system is pretty similar to yours:

    One chequing account through which all money is funneled.
    Two high-interest savings accounts; one is for general savings, the other is our emergency fund.
    Retirement accounts: one self-directed RRSP for each of us, my pension account, a separate group-RRSP with employer matching for Hubby.
    One taxable trading account holding dividend-yielding shares.
    A MasterCard in Hubby’s name and a Visa in mine.
    One Line of Credit as a back-up emergency fund source, currently unused.

    Sometime next year we’ll be adding an RESP for Junior.

    I can’t think why we’d need more than that, though I suppose it could change in the future.

  2. Fecundity,

    Thanks for your feedback. I like your idea for two high interest accounts, if you use a emergency fund.


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