How to Set up Your Bank Accounts

Having money in one big lump sum can be very misleading and can make it look like you have a lot more money than you actually do. I personally use this setup to distribute my finances so I know what money I have by just opening up internet banking. Doing it this way actually leaves me with more money than I expected to have at the end of the financial year.

Names of Personal Accounts

• Main – Has a card attached

• Bills – Has a card attached

• General Savings – Subaccount

• Home Loan Savings – Subaccount (where most of my savings sit)

• Pay from Work – Subaccount (where most of the money sits)

Names of Business Accounts

Client Invoice Payments – Subaccount (where most of the money sits)

• Business Main – Has a card attached

• Business Bills – Has a card attached

• Business Annual Leave – Subaccount

• Business GST – Subaccount

• Business Super – Subaccount

• Business Tax – Subaccount

Personal Savings / Investments

• Me Bank or ING Orange high-interest savings account.

 

The Downside 

This method creates more transactions to reconcile from a bookkeeping perspective. I make this as simple as possible by literally naming each transaction what it is. For example, a transfer between my client invoice payments account and my GST account is literally called CIP (client invoice payments) to GST.

This small amount of work will bring you lots of clarity when it comes to managing your budgets and knowing how much you can reinvest back into the business or how big to make your bonus. 

And like I said earlier I always find that using his method leaves me with more money at the end of the year than I thought I would have.

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