A money expert says this is the ‘perfect number of bank accounts’ to havehere’s how she sets it up – CNBC

Set a budget and stick with it. That's the advice that's been pounded into our heads as a golden rule of personal finance. But for many people, creating a budgeting plan is overwhelming, and following it is an even harder task.

As a financial analyst and host of the podcastPopcorn Finance, I get to hear about the effective strategies people use to make budgeting easier.

One of my favorites comes from money expert Sahirenys Pierce, who created the "High-5 Banking Method" as an easy way to manage her finances and build wealth.

True to its name, the High-5 Banking Method involves holding what Pierce calls the "perfect number of banking accounts" two checking accounts and three savings accounts.

The goal is to track individual budget areas in your accounts rather than in a spreadsheet, all while establishing a routine of transferring money to separate accounts each payday.

"When we teach kids how to count, we start with the basics of counting fingers from one to five, then move on to six to 10," says Pierce. "I wanted to make it that easy for us to remember how many bank accounts you need: just look at your hand."

High-5 Banking Method

Credit: Sahirenys Pierce

Each finger represents either a checking or a savings account:

This is for mandatory expenses, which typically take up a large percentage of your income. But not paying them can quickly affect your life and your credit score.

Examples:

This is for all your "wants." Transfer a set amount of money into the account each payday to cover whatever brings you joy. Once the account reaches zero, stop your spending until your next deposit.

Examples:

This financial safety net is reserved for potential future mishaps and unexpected expenses. Most experts recommend keeping at least three to six months' worth of living expenses.

We all have big dreams with a big price tag. This account allows you to easily track progress over time and allocate money to any goals that will take longer than 12 months to reach.

Examples:

The fifth and final account is for short-term goals that you want to reach within the next one to 12 months.

Examples:

You don't need to open all five accounts at once, says Pierce, especially if you don't have the financial means.

You can start with the three most important ones bills, lifestyle and emergency fund and then work your way up as you're able to contribute to different savings goals.

A few other tips Pierce recommends keeping in mind:

Chris Browningis financial analysis and creator and host of the award-winning podcastPopcorn Finance. He holds a bachelor's degree in finance and also works as a financial analyst specializing in revenue analysis. Follow him on Instagram.

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A money expert says this is the 'perfect number of bank accounts' to havehere's how she sets it up - CNBC