Each situation is different, but I will share what I use for personal budgeting:
1) Joint checking account - All income and expenses go into and out of this account. Keep enough of a cushion balance to avoid overdrafting.
2) Savings account – This account is designed to hold short-term savings for predictable expenses over the next one to two years. Sometimes people call these savings a sinking fund.
3) Emergency fund account - We use a high-yield savings account that pays interest just a little bit less than an available CD rate. These accounts can be found either at your local credit union or with an online bank. Make sure you have FDIC insurance coverage. It is important for this fund to be available but still in a separate account. I do not use CDs for my emergency fund savings. Most financial professionals recommend 3 to 6 months of expenses in an emergency account. Only use it for emergencies!
The important thing about these accounts is they are not there to earn you money or make you rich. They exist to keep you organized and protect against sudden cash needs.
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