This is the third part of a series on setting up a financial plan.
The beginning of the series is here.
The previous article is “5 Accounts, #1 – Checking“.
The next article is “5 Accounts, #3 – Online Savings“.

Last time, we looked at the checking account, and paring it down so that you’re not storing unnecessary money in there. There’s another very good reason for doing this which I didn’t touch on in the last post – practicing frugality.

With only the money needed for your “day to day living” sitting in your checking account, any sudden impulsive purchases have to be planned for. You can’t wander out to the stores and drop $350 on a “spur of the moment” xbox 360 purchase, because the money isn’t available to your debit card (and if you’re seriously impulsive, you’re sensible enough not to carry a credit card around all the time, right?)

Expensive purchases suddenly have to be thought through, weighed against your other financial priorities and then “budgeted” – before you splurge on plane tickets or games consoles, you’ll need to move that money back into your checking account especially.

This is where an online savings account comes in.