In order to have a great personal finance system, you should have at least 5 different accounts for different purposes. These 5 finance accounts would help improve your personal finance journey.
Checking Account/Debit Card:
This should be the first type of account you get as an adult. A checking account is an account for you to perform daily transactions such as deposits and withdrawals. This is basically your day-to-day bank account which almost always comes with a Debit card. I’m a fan of digital banks and I did not want to pay any monthly fees, so I currently bank with Tangerine Bank. I also highly recommend PC Financial (This + PC Optimum opens up a world of rewards options). There are many other options such as the big banks (RBC, Scotia, CIBC) especially if you’re not comfortable with digital banks.
Credit Account/Card:
This should be your next account, especially if you live in a country that uses a credit system. A credit account/card is an account with a pre-approved amount (a credit limit) for instance $5,000 which you can use to pay for goods and services. The goal is to ensure you're paying back the amount you used. You also can’t use more money than your credit limit.
A credit account/card is not FREE MONEY!
Do not use this account as free money that you won't pay back. Ensure you’re paying back on time to ensure you have a good credit score. You can find some good credit ethics in this video to help guide you. I currently use a Scotiabank Cashback credit card and it does what I need it to do, there are a lot of options out there, so do your research for what works for you.
High-interest Savings Account (HISA):
This is a very important account that people forget to have, but you need it! A HISA is where you put your emergency funds and all your other saving goals. This is where you put the money you’re not investing and you’re still able to get the highest interests possible. It's great to have more than one of these depending on your needs, specifically for me I use both EQ bank and Neo Financial. Both of these have a 2% and 2.25% interest rate respectively, which is the highest I'm aware of right now.
Investment Account:
Now to investment accounts! The wealthy make their millions through investing and compounding interest so don't sleep on investing. The easiest way to start investing is to start with ETFs and continue dollar cost averaging. You need an investment account for all your investments in the stock market or crypto. I currently use Wealthsimple and Questrade and you can definitely check them out.
Electronic Money Account:
This type of account would be very new to most of you. It's an online account that allows you to send money and spend money internationally. Now, this account is great for you if travel regularly, and send money across different borders regularly. This was the type of account I used a lot while paying my student loan as I had to transfer from CAD to USD to pay my monthly deposits. I currently use Wise as that has the cheapest cost to convert to different currencies and to send anywhere. You can have money in up to 50+ currencies on the app and you can have a card which can be used in any of those countries which is why it is great for travel. Unfortunately, you can’t send to Naira (NGN) for my Nigerian readers but you can use Lemonade finance to send money to Naira.
*I’m writing from a Canadian point of view, as I currently live there. Most of these work for whatever part of the world you’re in, except the credit account for countries that don’t use a credit system and the investment accounts for where there's still a high barrier to entry for investing. Definitely do some research on the best products in your country that would fall under these account categories. These 5 finance accounts would definitely revolutionize your personal finance journey.
