Everybody has heard, at least once, the “don’t keep all your money in one place” piece of advice. Well, back in the days, people used to actually respect this by keeping their ‘private secret money’ under the mattress or, in different socks (yeah, weird). This was the way of saving their cash without spending them all at once – apparently, a sock a day keeps the debt away. Now, try thinking of them as multiple bank accounts.
Nowadays, business operations require the use of different bank accounts (for various currencies, for instance). Working with multiple accounts has its perks, especially when you have to carefully manage the cash flow in order to stay above the threshold line.
Is it useful?
The straight-to-the-point answer would be: yes. But why? To consolidate your cash flow. It is a very good way to have an overview on your financial situation. For instance, it is the best way to ensure that you build wealth and avoid debt.
Many small business owners use their personal bank accounts when their company is growing. However, there comes a point when it’s important to maintain a separate business bank account, especially if you’re trying to claim business-related tax deductions. Keeping financial records in a lightweight financial platform can also help with growth and planning.
What does it mean?
When using ThinkOut, you have the possibility to add various accounts (usually referring to bank accounts, but it can also be the cash you keep in the drawer). Each bank account has a corresponding cash plan. This way you can record transactions for each account and be aware of the available money in each of them. If you want to have an overview on all your accounts, you can choose the All option – the cash plan adding all the transactions from all the accounts you entered.
Ultimately, which accounts your money flows through matters less than where it flows to. Utilizing multiple bank accounts actually makes keeping to a budget easier; there are higher chances to have spare money in one of the accounts, which can cover cash flow gaps and unexpected costs. Also, consider a special reserves account for those ”rainy days”. Include it in the cash flow planning, but try to stay away from using it to cover expenses unless really necessary.
All in all, plan carefully and save as much money as possible for both future needs and desires.