How Many Bank Accounts Do I Really Need?

Summary

In this engaging conversation, John discusses his plans for combining finances with his fiancée post-marriage. The host, Dave Ramsey, commends John's proactive approach and shares his own experience, advocating for simplicity by recommending a central account with sub-accounts for different financial goals. Dave emphasizes the importance of having a unified financial strategy and suggests using a single financial planner for both partners to ensure shared understanding and language. The discussion also touches on the benefits of high-yield savings accounts and the importance of keeping things straightforward to avoid complexity in financial management.

Takeaways

• 💍 John and his fiancée are planning to combine finances after their marriage in August.
• 📊 They want advice on how many bank accounts they should have to manage their financial goals.
• 👍 John is praised for being proactive and planning their financial future early.
• 💡 Initially, John had multiple bank accounts for different purposes, which became a complicated mess.
• 🏦 The recommendation is to have one central account with sub-accounts for different savings goals.
• 💻 Keeping the emergency fund in a separate online high-yield savings account is a good strategy.
• 🏝️ Having separate savings accounts for specific goals like vacation and car upgrades helps in tracking funds.
• 🔍 Avoid over-complicating by having too many accounts; simplicity is key.
• 👥 Using the same financial advisor for both partners can provide consistent advice and help in achieving common goals.
• 💬 Communication and simplicity in financial planning are crucial for a successful marriage and financial future.

Q & A

What is John's main concern regarding his upcoming marriage?

John is concerned about how to combine and manage his and his fiance's finances after they get married.

What advice does Dave Ramsey give for managing finances as a newly married couple?

Dave Ramsey suggests having one central account with sub-accounts for different financial goals, such as savings, emergency fund, and lagging fund.

Why did Dave Ramsey initially have multiple bank accounts?

Dave initially thought having multiple bank accounts for different purposes would make things simple and organized, but it ended up creating a mess.

What is the purpose of sub-accounts within the central account according to Dave?

Sub-accounts within the central account are used to categorize and manage different financial goals, such as saving for a car or an emergency fund.

What does Chris suggest for the emergency fund?

Chris recommends keeping the emergency fund in a separate online high-yield savings account.

How does Chris differentiate between different savings goals in his account?

Chris uses multiple sub-accounts within one account to separate funds for syncing, vacation, car upgrades, and other goals.

What is the recommendation for managing Roth IRA accounts after marriage?

Dave suggests keeping it simple and having the same financial advisor for both accounts to ensure both partners are working towards the same financial goals.

Why is it important to have the same financial advisor for both partners?

Having the same financial advisor ensures both partners are receiving the same advice and can communicate effectively about their financial goals.

What is the general theme of financial advice given by Dave and Chris in the script?

The general theme is to keep finances as simple as possible, avoid complexity, and maintain clear communication between partners.

What is the purpose of having a separate high-yield savings account for the emergency fund?

A separate high-yield savings account can provide better interest rates, helping the emergency fund grow while still being easily accessible in case of need.

How does the script suggest couples approach financial planning after marriage?

The script suggests that couples should approach financial planning with simplicity, using a centralized account system with sub-accounts for different goals, and ensuring both partners are on the same page with the same financial advisor.

Outlines

00:00

🤵👰 Financial Planning for Newlyweds

In this segment, John, a soon-to-be-married individual, joins the show to discuss financial planning with his fiancee. John is looking for advice on managing finances post-marriage, particularly regarding the number of bank accounts they should maintain. The host commends John for his proactive approach and shares his own experience, which evolved from having multiple bank accounts to consolidating into one central account with sub-accounts for different savings goals. The advice given is to keep things simple and not to overcomplicate the financial setup. The conversation also touches on the idea of having separate or joint financial advisors and the importance of unified financial planning and communication in a marriage.

05:01

🏦 Streamlining Finances with Sub-Accounts

This paragraph delves deeper into the strategy of managing finances through a single central account with multiple sub-accounts. The host emphasizes the importance of simplicity, suggesting that having a checking account and a savings account is a good start. He also mentions the benefit of using an online high-yield savings account for the emergency fund to earn a higher interest rate. The discussion highlights the advantage of keeping all financial activities within the same banking institution to avoid dealing with multiple banks and to clearly separate funds for different purposes, such as sinking funds for large purchases like cars or vacations.

Keywords

💡finances

Finances refer to the management of money and include budgeting, saving, and investing. In the video's theme, it's central to the couple's planning for their future together. The script mentions combining finances and managing financial goals as a key part of their pre-marital planning.

💡bank accounts

Bank accounts are financial accounts maintained at a bank or other financial institution, used to hold money. The video discusses the number and types of bank accounts a couple should have, emphasizing the importance of simplicity and organization in managing their finances.

💡financial goals

Financial goals are objectives related to an individual's or couple's financial planning, such as saving for a car, a house, or retirement. The video script talks about setting up accounts to manage and achieve these goals, like a car upgrade fund or a vacation fund.

💡emergency fund

An emergency fund is money set aside to cover unexpected expenses or financial hardships. In the script, it's mentioned as one of the sub-accounts within the central account, highlighting its importance in personal finance planning.

💡savings account

A savings account is a deposit account held at a financial institution that allows money to be saved and withdrawn. The video suggests having a savings account as part of the couple's financial setup, possibly with sub-accounts for different savings goals.

💡high-yield savings account

A high-yield savings account offers a higher interest rate than a regular savings account, making it a more profitable place to store money. The script refers to keeping an emergency fund in such an account for better interest gains.

💡Roth IRA

A Roth IRA is a retirement savings account in the United States that provides tax advantages. The video discusses whether couples should keep their individual retirement accounts separate or combine them after marriage.

💡financial advisor

A financial advisor is a professional who provides guidance and advice on financial matters. The script suggests that couples should consider having the same financial advisor to ensure they are working towards the same financial goals and have a unified financial strategy.

💡streamlining

Streamlining refers to the process of making something more efficient and less complicated. In the context of the video, it's about simplifying financial management by having fewer bank accounts and a more organized approach to finances.

💡sinking fund

A sinking fund is a separate account used to save money for a specific purpose, such as a large purchase. The video mentions creating sinking funds for goals like buying a car, illustrating a strategy for saving towards specific financial objectives.

💡simplicity

Simplicity in this context means making the financial planning process as straightforward and uncomplicated as possible. The video emphasizes the value of simplicity in managing finances, advising against over-complicating the couple's financial setup.

Highlights

John and his fiance are planning to combine finances before their marriage in August.

The couple is interested in managing their financial goals and growth.

John is praised for mapping out a financial plan early in the marriage.

Both John and his fiance are into numbers and are excited about financial planning.

Initially, Dave had multiple bank accounts for different purposes, which he later found to be a mess.

Dave now recommends having one central account with sub-accounts for different savings goals.

Sub-accounts can be created for emergency funds, lagging funds, and sinking funds for specific purchases.

Keeping all accounts in one place simplifies management and visibility.

John keeps an emergency fund in a separate high-yield savings account.

For other banking needs, John uses a local brick and mortar bank.

Having multiple savings accounts within one bank helps separate funds for different purposes.

It's recommended not to over-complicate finances with too many accounts.

The advent of online banking has made it easier to manage multiple accounts.

John and his fiance plan to close or add names to their individual college accounts.

Streamlining finances into one place is suggested for simplicity.

Roth IRAs are individual retirement accounts and can remain separate.

It's recommended for couples to have the same financial advisor for unified financial planning.

Keeping finances simple and unified helps avoid confusion and promotes cooperation.

Transcripts

foreign

John joins us in San Diego California

John welcome to the Ramsay show

hey thanks you guys for having me today

honor to speak with you and your

listeners thank you how can we help

yeah so just a question for you guys my

fiance and I are getting married uh in

August cool congrats and drafting up uh

thank you guys you know we've been

drafting up a kind of a plan to combine

our finances once we get married and

obviously we'll do our day-to-day

checking account but beyond that you

know I was curious what what you guys

teach I was looking for a video that

Dave was talking about this and couldn't

find one

um how many other bank accounts should

we have open or do you recommend that we

have open to just kind of manage our

financial goals and grow up the baby

steps I'm just curious to get your

thoughts first of all John you're a stud

the fact that you're trying to map out a

plan for this already I mean I feel like

this marriage is already off uh to a

good start John well you know dirt's

attract I think we both are into numbers

and maths and we're both very excited to

do this and you're both on board with

the Ramsay plan

all right John so I'm going to tell you

what I did in my marriage okay okay

great the first time same marriage what

I was gonna say clarify John clarify and

then after we were married for a while

I'll tell you what what happens now okay

when we first got married

let's be honest I was a genius and by

genius I mean I was an idiot and I had

an account for savings I went to One

bank then I went to another bank for our

checking account where our paychecks

were deposited I had another bank for

like a side hustle account I I ended up

with bank accounts everywhere and I

thought what I was doing was making

things very simple and cut and dry I

would always know where this was and

that was never what I made was a huge

mess a giant idiotic mess

and so now we have one account a one

Central account and in it we have sub

accounts there one might be a savings

account one as our emergency fund one is

a lagging fund because the way we get

paid here at Ramsey Solutions so I will

dump money into that one and hold it so

I can pay some my continue to pay my

house off and things like that but I

create we create sub accounts and then

if we want to have a sinking fund to

save up for a car we created another one

and dumped money to that one so it all

stays in the same place we can see it

with the same account it goes on the

same every dollar app we don't have to

deal with 50 different banks that's my

recommendation yeah that's a good word

there and I'll tell you what I do John I

keep our emergency fund in a separate

online high-yield savings account and

then we do all of our other banking with

a local brick and mortar uh here in town

and we have a checking account and then

we have our savings accounts and like

John said you can have multiple we have

one for syncing funds we have one for

vacation we have one for the car upgrade

fund and at doesn't complicate things

but what it does when it's in one

account it helps you separate what's for

what right because you have one giant

savings account you go well how much of

this for the car and how much of this

for emergencies and what's for vacations

and so you can make as many as accounts

as you want but like John did don't over

complicate it

if you have 15 accounts it may get a

little hairy so I was go I would say

have as few as possible while still

accomplishing your goals

yeah because you know with all the

Advent of online banking I mean there's

so many ways to check a million

different banking apps and she and I

have like several Credit Union accounts

that we've individually had open since

we're both in college obviously we'll

close those or add each other's names

soon but I like the idea of just

streamlining it so that it's all in one

place does this also go for like

obviously our Roth IRA is going to stay

independent well you know because it's

an individual retirement account

um do you guys recommend that when

couples get married if they have the

exact same financial advisor for both of

those accounts or you know she and I

obviously before we met at different

financial advisors for those so

um what do you guys recommend for those

kinds of accounts

see who does better you'll have a death

match and you see which one you pick I'm

just kidding yeah hey keep just let this

be as y'all start your marriage

let this let the word simple distill

every one of your decisions what's the

simplest way we can do this right now

the world is selling us complexity the

world is selling us you need to be doing

this if you're not doing that you should

be doing that and why why oh you're in

the world is telling us individualism

which is how dare you

communicate with somebody else about

their financial goals that's hers well

she's my wife I don't care that's her

goals your goals

simple simple simple

um I yeah I recommend having the same

financial planner that's so great I

don't want to get different advice that

my wife's getting and we're gonna we're

both working together towards the same

Financial goal and I want you in the

room at the same time talking to that

person right so that you both have the

same language and understanding versus

well my financial advisor told me to do

this they told you told me to do that so

I would keep it simple like John's

saying stick to that checking account a

savings account and if you want to keep

it separate because that makes me not

touch the Cookie Jar when it's over here

in this online account uh I like that

and you sometimes will get a higher

interest right now I'm at like one

percent which is amazing in the world of

a savings account crushing the game uh

but again it's not there to make you

money it's there to protect you