Jaspreet Singh Reveals How To Organize Your Finances The Way Wealthy People Do

In one of his latest videos, financial guru, attorney, and entrepreneur Jaspreet Singh explained that, “Wealthy people don’t just keep all of their cash in one bank account. They have designated money to be invested, designated money to be spent, and designated money to be saved for an emergency.”

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According to Forbes, the richest people in the U.S. are about $500 billion richer than just one year ago and now hold a record $4.5 trillion in combined wealth. So, it’s important to understand how the wealthy handle their finances — so that you start to become wealthier yourself.

Figure Out Where Your Money Is Going

Singh explained that the best way to start is to organize your money and figure out where your money is going.

By creating a monthly list or spreadsheet with all your expenses, you’ll be able to visualize the breakdown of your money each month. Singh said that once you can see “how much you’re spending and where,” you can take control of your finances.

“If you’re not saving any money, that’s a red flag and if your expenses are higher than your income, that’s a huge red flag,” said Singh. Organizing and tracking your money will reveal where you’re spending too much money and in what categories you might need to cut back — including restaurants, airline tickets and travel, for example.

Also: Jaspreet Singh Says America’s Economy Is About To Get a Reality Check, Here’s Why

Why It’s Important To Open At Least Three Different Bank Accounts

Singh indicated that having at least three separate bank accounts is very important. The three bank accounts should be designated as the following:

• Spending account: Your spending account should be designated for the money you’ll spend each month on needs and wants.

• Investing account: This account should be funds allocated for investments. Investments can include stocks, real estate, investing in a business, etc.

• Saving account: You should consider saving about 3-12 months of expenses in this account (depending on your risk tolerance) to cover the costs of an unexpected job loss or other life event that may impact your income.

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When you have all of your money in one bank account, it’s very easy to just spend it all. “Most of us have a ‘net zero mindset’ meaning that if you have $1,000 in your account, you can spend that money,” said Singh.

To avoid this habit, Singh advised following a 75/15/10 strategy when it comes to your money. No more than 75% — or $0.75 per dollar earned — should be allocated to your spending account, 15% should be allocated to your investing account, and 10% should be allocated to your savings account.

By setting up automatic weekly deposits from your spending account to both your investment and savings accounts, you can prevent spending all of your money recklessly. If you don’t see that money in your spending account, it gets a lot easier to figure out what you can afford while living within your means. Following these steps is one way to set yourself up for financial success and a wealthier future.

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This article originally appeared on GOBankingRates.com: Jaspreet Singh Reveals How To Organize Your Finances The Way Wealthy People Do