Nobody wants to hear it but when you reach your late 20s, you start to reflect on your personal finances a bit more. Perhaps, hindsight kicks in and you wished you didn’t spend all your money and saved some of it. For me, I didn’t have financial literacy lessons from my parents so you can only imagine the damage I was doing when I opened my first credit card. In essence, I viewed credit cards as an extension of my bank account and before I knew it, I’d accumulated about $10,000 in my early 20s with only a part-time job to try to pay it down. Eventually, my dad bailed me out and from then, I knew I never wanted to be in debt again.

Regardless, your 20s are the time to learn and make mistakes, and I’m a firm believer that your early 20s is a great time to have fun and go on adventures. Despite my CC debt, I don’t regret my adventures! Whether you’re in your early 20s trying to develop your finances for the future, or your late 20s trying to start saving for your future, I’m sharing how I finally set up a banking method that helped me develop my financial habits.

One of my main philosophies when it comes to money in the bank is this: give every dollar a job or make every dollar work (the first one being, pay yourself first!). There’s nothing worse than having money sitting idly in your checking account not being invested or not accumulating high interest. 

Enter the “High-5 Banking Method” by Sahirenys Pierce. Simply put, the High-5 Banking Method condenses your bank accounts into 5 easily manageable bank accounts with their own individual purpose(s) and it’s the easiest banking method I found to date.

Pierce shares 5 bank accounts you should set up – bills, lifestyle, emergency, long-term, and short-term. How and where you choose to set up these bank accounts is up to you!

Here’s how I set up my accounts.

My Main Central Bank

  • Checking Account #1

This is my main bank account at a local credit union. It’s the checking account that is home to all my income from work, rebates, friends/family, etc.

In this account, the balance is always $100 once I’m done paying off my credit cards, and bills, and allocating my paychecks and any other income. I keep $100 as a floater in case I need to use my debit card or withdraw some cash. Otherwise, I always pay with my credit cards for the rewards.

  • Checking Account #2 – Bills

In this account, I keep all my pre-authorized payments. This excludes any bills that are covered by my credit cards (eg. cell phone). This account generally houses my mortgage payments, strata fees, and student loan payments.

  • High-Interest Savings Account #1 – Sinking Funds (Short-Term Savings)

Lastly, I have a Sinking Funds account for short-term savings. I set it up in a HISA because there’s always a balance on this account and I apply whatever interest I earn towards one of my sinking funds. All the savings are lumped together and I have a tracker of how much is allocated per item. In this account, I put money aside for things such as my yearly charity donation, next year’s property taxes, a vacation, a luxury blazer I’m saving up for, etc. 

Why a credit union? For those interested, I bank with a credit union primarily because it’s free. I’ve been with big-name banks that would charge a fee for not having met a minimum balance so for the way I set up my banking method, a credit union makes the most sense to me. I also get unlimited transactions, unlike free checking accounts at major banks that limit you to 12 transactions a month. I’m not sure about others but my credit union also offers competitive mortgage rates, car loan rates, investments, etc. so I’m not missing out on anything else that a big bank has to offer.

My Investment Accounts with WealthSimple

  • RRSP (High risk)

I originally opened WS to invest my retirement funds. Since I’m in a higher tax bracket, I chose to open an RRSP to help reduce my taxes every year. As it’s a retirement fund, I’ve set it to high risk and ride out any falls.

  • Emergency Funds (Low risk, Tax-Free Savings Account)

Hear me out – I choose to keep my EF so it’s constantly investing as opposed to having the funds sit in a checking account or a low-rate savings account. Any dividends I receive automatically go back to my EF. Since transferring funds can take up to 7 business days from WealthSimple, when an emergency occurs, I cover it with my credit card (hello, rewards points!) and then withdraw the amount from my emergency funds to pay back what I owe. As soon as I touch my emergency funds, I work towards replenishing them back to their original amount of at least 6 months of expenses. 

  • Pet Emergency Funds (Low risk, Tax-Free Savings Account)

Similar to my emergency funds but for pets only. My vet was very transparent and told me that the most expensive pet emergency hovers around $17,000 to $18,000 so I chose to save $20,000 for my two cats and a future dog. I personally don’t believe in pet insurance so any money that doesn’t get used in this emergency funds can be put towards something else. However, for the time my pets are still alive, this account exists just for them. My two cats are indoor cats which limits any risks of emergencies. 

  • Building Wealth (High risk, Tax-Free Savings Account & a slight long-term savings account)

It’s a random account that I dump money into from time to time to basically have cash on hand to boost my net worth and in a way, it’s sort of acting as a slight long-term savings account. If I’m 60 and decide to buy a yacht, I’d probably take it from this account.

Why WealthSimeple? I love WealthSimple. It’s soooo easy to use and it nets me more than my mutual funds ever did. I’m not an investor and I don’t want to be so it’s nice to have a robot investor do the work for me and the option to buy long-term stocks to hold every now and then. If you’re interested in signing up for WeathSimple, click here and enter my referral code 4YYKSG for a free $5 and then up to free $3,000 as a welcome bonus.

*Not sponsored by WealthSimple. 

My High Tax-Free Savings Account and GICs with EQ Bank

Last but not least, I have a single TFSA with EQ Bank. My mortgage allows a once-a-year principal payment so I keep my extra mortgage payments in this 3% interest rate account. My goal is to pay off my mortgage as quickly as possible so I choose not to mess around by investing it, even at a lower risk. Since I access these funds once a year, I sometimes buy 3 or 6 months GICs depending on the return rates. This account will most likely be closed once the mortgage is paid off.

Why does this work for me?

In the past, all I had was one checking account, 1 savings, and 1 mutual funds account all under one main bank. It ultimately didn’t work for me because money just sat there, doing nothing (big banks, it’s not a “high interest” savings account when you offer only 0.01% interest rate)… and when a shopaholic sees money sitting there, they’re often tempted to spend it because they view it as disposable money (or at least, I did, for the longest time!). Since allocating each dollar to a “job”, I view myself as not needing to “spend” that money on frivolous things. 

That being said, I don’t limit myself from enjoying life. Just because there’s no physical cash in my bank account for my disposable, I still enjoy life with my credit card and keep a close eye on how much I spend each month. As someone that pays off their credit cards every month, it makes sense to utilize their rewards system than to keep a balance on my debit card and not get rewarded when spending money. So, in theory with the High 5 Banking Method, I still have fun but essentially pay for the fun and entertainment a couple of weeks later. 

My paydays do require a little bit of extra work allocating my money to the appropriate accounts but it’s worth the extra 5-10 minutes of work for me. The High 5 Banking Method allowed me to save and invest more than I ever did before, not because my salary has increased since I was a teen, but because it changes my mindset on how to use my money. Sure, some may argue that I could just save my money but simply saving doesn’t work for everyone. Exploring different money management methods is encouraged until you find the one that fits you, your lifestyle, and your mindset! 

Disclaimer: I am not a financial advisor. I encourage my readers to explore and develop the best financial habits that work for them. If you are in serious debt, I recommend you seek out a licensed financial advisor to discuss your options. 

With love, Claire


  1. jeanettemonyeki26gmailcom Reply

    Savings are really important. I blew so much money in my early twenties and now I just want financial stability. Thanks for sharing these tips.

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