Woman Explains How She's Avoids Overspending By Separating Her Money Into Six Different Bank Accounts
"It keeps me accountable, responsible, and most importantly I avoid overspending!"
Voronaman | Shutterstock.com A significant portion of Americans have a spending problem. Despite the poor state of the economy, 31% report spending more than they can afford each month, according to a Wells Fargo survey.
Fortunately, a realtor and investor named Ashliey shared an ingenious hack that helped her to curb her overspending.
She explained how she avoids overspending by separating her money into 6 different bank accounts.
"Here's an accounting tip I live by," she began in her TikTok. "I separate all my income into six different bank accounts. I know that might sound excessive but it helps me so much not to overspend in any of these categories."
Whenever Ashiely receives a check, she first takes 5% off of the top to invest in stocks.
"If I have other investment opportunities, I pull from the savings or the bills and lifestyle,” she added.
After investing, Ashiely splits up the remaining money — 30% goes into a tax account, 20% to savings, 20% back into her business, 20% for bills and lifestyle, 5% for travel, and 5% for donation.
This is similar to the envelope budgeting approach, also known as "cash stuffing." While Ashiely divides her money into separate bank accounts, you can do the same with envelopes if you're more comfortable dealing with physical cash.
"The concept is simple," Nerd Wallet explained. "Take a few envelopes, write a specific expense category on each one — like groceries, rent, or student loans — and then put the money you plan to spend on those things into the envelopes."
Budgets should be personalized.
Melissa Browne, author of "Budgets Don’t Work (But This Does)," told CNBC that she treats budgets like "diets" because they shouldn't be extremely rigid for every person.
"Budgets don’t work for many people in the same way diets or one-size-fits-all eating approaches don’t work long term," she said.
"Instead, I believe that finances are personal. In the same way that it’s not about dieting but rather eating well, I don’t believe it’s about budgeting but rather spending and investing well."
If you choose to implement Ashiely's system, don't feel like you must stick to her specific percentages. You know your financial situation — maybe you need to put a bigger percentage towards bills or maybe travel doesn't apply to you.
Personalize the system to work for you and your life and don't feel bad if you have to adjust.
Nia Tipton is a staff writer with a bachelor’s degree in creative writing and journalism who covers news and lifestyle topics that focus on psychology, relationships, and the human experience.