Why keeping all your money in one account may be hurting your finances

(InvestigateTV) — People drowning in debt could benefit from a financial reboot, a reorganization of their entire budget.

Kionnie Epps, founder of the YouTube channel The Responsible Homegirl, said many people don’t manage money well because they have one account where all money goes in and gets spent.

“There’s no organization and there is no separation. So, I always like to tell people the best way to get organized is to have separate accounts. And in the beginning, it may seem like a lot of work, but having this separation really helps you, one: pay your bills on time, stay ahead of the game, and then two: get a handle on how much you are actually spending,” Epps said.

Four accounts for better money management

Epps recommended four accounts. The first is a “bill” account where money is deposited and bills come out.

The second account is a regular savings account for short-term savings, covering three to six months of expenses.

“The third account that you need is a fun money account. So, this is your miscellaneous spending. This is your random spending. This is your eating out. This is your shopping. You don’t want your shopping money with your bill money, because most of the time we spend way too much money shopping, than we do, paying our bills, and then we’re in a situation where our bills are late,” Epps said.

Epps said to create this account at a different bank with a separate debit card.

The final account to create is a high-yield savings account, different than a traditional savings account because it pays a higher interest rate.

Epps said this is for saving long term for a house, a car or a big vacation.