Why you should open a second bank account

30 May Why you should open a second bank account

I want you to be financially free, and I think that the key is making wise investments that take care of your daily and monthly needs. I call this philosophy “Forever Cash” and even wrote a book about it.

But the first step is setting aside enough money to make your investments. Most folks with money problems don’t have problems earning money – they have problems managing the money they earn. So on page 83 of my book, I offered a solution:

To master the temptation of spending that money, here is what you can do:

Open two separate savings bank accounts. Call the first account your “Investment Account.” Put 95 percent of your newly generated income and 95 percent of all the profits from your investments, be it One-Time Cash, Temporary Cash, or Forever Cash, into that account. Destroy the debit cards and checks the bank gives you for that account, so that you are not tempted to waste the money. Instead, just use wire transfers that still—in most U.S. banks—require you to go down to the bank to wire the money to the party you do business with and purchase an investment from. That way you won’t touch the money, and you just make deposits until you have enough cash in that account to place your next investment.

Call the second account your “Fun Account.” Put 5 percent of your newly generated income and even 5 percent of your Forever and Temporary Cash profits into a rewards/fun account. Regularly use that to enjoy some of the extravagant things you love but which will not add to your wealth. Stuff like going to Vegas, or buying a new stereo for the car, or a $400 pair of shoes (for the ladies). I do stuff like that on a regular basis (okay, not the shoes), but I recognize what I’m doing. I am aware that taking money I get from my rental houses and buying a new couch, or even just an iPad, will mean that I can’t use that money to further my path to financial abundance. But I also know that these rewards keep me going and let me enjoy the journey.

Why not give it a try yourself? It just might help you take that first step into a world where money is no longer a source of stress.