Budgeting expert reveals why everyone should have at least FOUR bank accounts

A budgeting expert has revealed why the key to building a personal fortune is to open four bank accounts that you use for different financial gains.

andres peeka US-based finance expert, he frequently shares his best-kept financial secrets on his TikTok channel.

With the number of unbanked Americans falling to an all-time low, the financial adviser is on a mission to teach his followers how to become financially free with the help of the bank.

In a recent video, the money coach detailed the importance of setting up four different bank accounts to become more financially responsible.

“There are four bank accounts you need in your life,” Andrew said before adding that his followers “need” to open these accounts and that they will “thank you” later.

An easy and accessible way to spend and make payments! Open a checking account to become financially responsible

A 2021 study from the Federal Deposit Insurance Corporation found that 4.5 percent of Americans, representing nearly 5.0 million households, did not have a bank account.

The study came as a surprise, as it was the lowest level recorded since the FDIC began tracking bank account data in 2009.

With the study in mind, Andrew revealed why everyone should have four bank accounts, starting with a checking account.

“First it’s a checking account, this is where your paycheck goes, and this is where you’re going to spend,” the financial adviser revealed.

A checking account is designed to give you easy access to your money, while keeping it safe.

You can make regular deposits and withdrawals, if you prefer cash.

It’s one of the most common account types, with more than 91 percent of Americans holding the traditional account.

Since checking accounts are FDIC insured, you can have financial security, easy access to your funds, and financial peace of mind.

Storing large amounts of cash is a big risk for you and your family, so a checking account is a safe option to store your money.

A checking account also makes it easier to handle checks, pay bills, and manage your money.

Paying bills or expenses with cash runs the risk of the payment not being tracked or recorded correctly, which means that if a business rejects your payment, there’s no way for you to prove that you sent a payment in the first place.

However, with a checking account, you always have a paper record of every purchase or payment you make.

Plus, a checking account offers no transaction limits, so you’re never limited in terms of withdrawals, payments, checks, or money transfers.

A checking account gives you the most financial freedom and is the preferred choice for your number one account type.

Save it for a rainy day! Allocate money to a savings account in case of emergencies

The second type of account that the money expert advised his followers was a savings account.

Andrew said: ‘You need a savings account, this is your emergency fund.

“You don’t need as much in the background for rainy days, but you need just enough to be able to cover life or shit that happens.”

He said money should be set aside for taxes throughout the year, explaining that the cash saved should also be put into the savings account.

Like a checking account, savings accounts give customers a way to store their cash in case of an emergency.

Since these accounts are meant to help you save money rather than spend it, if you decide to withdraw an excessive amount, you may be subject to a withdrawal fee.

Since you can’t access all of your funds at once, a savings account can be a great way to help you save for college, a car, or any other major expense.

They are also a great way to set up an emergency fund to cover any unforeseen medical expenses, employment gaps, etc.

An emergency fund should include expenses for three to six months and take into account costs such as utility bills, food expenses, and housing costs.

Invest in yourself! Open a business account to help build your brand

The third type of account that the financial expert revealed that you should have is one that is often forgotten.

“People don’t think about this, but the best way to build wealth is to start something, your own project, your own business, your own hustle, whatever.

‘You need an entrepreneurship fund so that you can start basic things, like going to an event or conference, making a website.

“Whatever it is, you need a venture fund, because your venture fund is probably the thing that will help you build wealth the fastest,” Andrew explained.

The budget expert has previously detailed the importance of investing in oneself, which will help an entrepreneurship fund.

“The best investment you can make is in yourself,” he explained.

Andrew said you can increase the success rate of investing in yourself by making “more and more decisions” that place you in “all kinds of responsibility where people trust you to make a decision.”

He explained that establishing a venture fund is an important part of investing in yourself and planning for your future because it helps you grow your brand.

Plan for the future! Make sure you have a retirement account to prepare for life after work

The last type of account that the budget expert advised everyone to have was a retirement account.

‘You want to have a retirement account, this can be like a ROTH IRA, 401(k), but you need something.

‘Call me crazy, but I don’t think the structures we have today will take care of your retirement for you, so you have to take care of it yourself.

“And if that’s the last one you start filling out, that’s fine, but make sure you have it there so you know you have a responsibility to it,” Andrew explained.

A retirement account is intended to provide you with a substantial amount of income after you stop working.

If you don’t save money, you will have no choice but to keep working past your ‘traditional’ retirement age, because Social Security is unlikely to be able to provide you with enough money.

There are two basic retirement accounts as defined by the Employee Retirement Income Security Act (ERISA): defined contribution plans and defined benefit plans.

A defined benefit plan offers an employee a specified monthly amount at retirement and is also known as a pension.

Generally, you will have to work a certain number of years to qualify for these benefits.

On the other hand, defined contribution plans do not ensure a specific amount at retirement, rather the employee and the employer contribute to these funds. When the employee retires, he will receive the balance in the account.

These plans include 401(k), 403(b) plans, and Employee Stock Ownership Plans (ESOPs).

Another form of a defined contribution plan is an Individual Retirement Account (IRA).