Finance

These 4 Accounts Can Make You a Millionaire

Most stop just short of what they need

Photo by Eduardo Soares on Unsplash

Common wisdom tells you to automate your savings with three bank accounts.

1. A general spending account
2. An emergency savings account
3. A stock trading account

The idea is to have your income go into your spending account with a portion — usually 15% — automatically distributed to the emergency savings until it’s fully funded, and then to the stock account until you retire.

That’s an excellent plan, but it’s missing one crucial step.

What happens when you use the three account method

You need a lot of discipline to make the three account method work for you.

I used it for a decade, and every time I wanted to make a big expense that I didn’t have time to save for, I would have to pull out of the emergency account. It may seem that those out-of-the-way expenses are what the emergency account is there for, but it’s not. Not always.

When my wife gets an unexpected two weeks off work, we hit the coast. Unfortunately, we don’t always have this money planned, so we tend to cover the cost of the trip with our emergency…