Money Jar System - advise needed on bank accounts
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Thank you for your reply there.
What do you mean when you say that "they can be virtual"? ...as in all the savings can just be in the same account? As opposed to being physically split into different accounts/banks?
Yes: the money can be in as many or as few accounts as you like, but you can have a spreadsheet or budgeting software (like others on here, I use YNAB) to "separate" the money into different pots. There are only a handful of accounts offering decent interest rates and the more physical pots you have the higher the risk that you start losing money by not getting the best interest on the actual amount of money you have.0 -
You already have a Help to Buy Isa (hopefully with Halifax) so that's the best option there.
Open a new current account (no need to switch) and put everything (all £15000 of it) into a Santander 123 account. you will earn £37.50 gross interest in month 1 (less your £5 fee) and when you have filled it up the the maximum of £20k you will be earning £50/month (less £5 fee) a potential of £600 a year max (-£60 in fees) + cashback from any household bills you pay - just contact the companies and ask them to take money from this account instead of Halifax so you benefit from cashback on bills.
You can keep the Halifax current account with 2 non household direct debits (that don't qualify for cashback with Santander) and have a standing order send £750/month to it from Santander, then have a standing order to return it back to Santander the next day. that way you also get your £5 from them and you earn interest on the 750 that would otherwise be going stale in there#141 - Save £3k in 2016 challenge - #141
Current savings: £901.06 / £3k
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That does make more sense to be honest!! Would make tracking and keeping on top of the accounts/money easier on the eye and the mind. And yes, I do plan on getting a house/apartment either this year or next.
Would you have any suggestions to decent interest paying current accounts at all?
The problem I have is the severe lack of knowledge and confidence to move and commit to a new bank account(s) - hence why I have always stuck with Halifax.
I worry about hidden fees, commitments, being locked in, restricted access, effecting credit score etc.
Thank you for your time - sorry if I sound absolutely clueless (it's probably because I am..
)
Tesco, TSB, nationwide have no fees and are relatively easy to set up. How much is your total savings currently?0 -
pathtofreedom wrote: »I use ynab which is software to help manage your money. You could still have the categories you want, or different ones.
When people say virtual they mean you keep all your savings in one account, thereby earning more interest as you'll have a bigger amount in there. You need to have a spreadsheet or some software like ynab though to stop you accidental spending out of the wrong category. So you always check your spreadsheet, or ynab before moving or spending any money out of any of the accounts. Rather than getting over exciting and seeing a few thousand in savings in one place and thinking you're "rich".
Even if you don't use ynab it is worth watching their free webinars to see how they budget and allocate money and you could always use a spreadsheet instead. I like their graphs and things though so it works well for me.
Thanks pathtofreedom.
I have checked out YNAB and it looks great! Would I use YNAB for both my current account and for my savings account? It’s just like using a spreadsheet I assume? Used to track what money I have, and where I have allocated each £ in my account (the virtual money jars) - even though physically its sittings all as 1 lump sum, right?
Would you suggest paying for it? It’s a tool which pretty much pays for itself I assume?0 -
This book was not written with the current UK financial scene in mind. Ways of saving were very different less than 10 years ago. Take note of the advice, and alter it to fit your situation, now.
Where to put the money - look at ...
As others have said, use virtual jars. Perhaps use your Halifax Reward account for your immediate needs spending, but since it doesn't pay interest, keep the balance low. Spread the rest around the high interest accounts, including the Regular Savers (you can actually put more into them than you have spare every month - done right this moves money from lower rates to higher rates and makes room for windfalls).
Necessities (NEC – 55%) Really, you don't have a great deal of control over these (if they're truly necessities) apart from ensuring you're getting the best deals - see MSE main site. So the actual percentage is what it is, and you should be trying to minimise it (within reason, no need to live on cold baked beans in a freezing garret). The less you spend here, the more you can save for financial freedom or luxuries.
Your Financial Freedom Account - this should be in an S&S ISA, or possibly a pension, not a bank account. You don't have to invest every month, but this is certainly possibly, can be completely automated, and can get lower transaction fees.
Personally, I wouldn't be spending 10% of my income on so-called education, which sounds more like donating to the self-help industry, nor would I try to spend 10% of my income on 'fun' every month. Certainly you need to spend a little on relaxation, but 10%!
Oh, you can't spend 5% on tithing - by definition it has to be 10%.
Hi Eco Miser,
Thank you for your input there, I think it’s easy for me to get swallowed up in the book (I think that’s what’s happened). Your comments about making the advice fit my needs was really needed, thank you! This was the first real thing I have ever read about money and finances and since reading it have been inspired to get my act together!
Yes, I am going to start using the virtual jars via YNAB as pathtofreedom and bobobski suggested. My Halifax Reward account is the account that I have always had since I can remember. It’s used for literally everything in my life! Currently it has £3.2k in. My other account which is my Halifax Saver account, which is 0.25% has now £10k in of savings. And my Help to Buy ISA has £1k in.
I added up my monthly expenditure and its about £ 400 a month out now, so I have a good chunk of money to be saving and distributing out! ..its just where to put it which is stumping me.
I will probably keep my Reward account down to £700-800 a month now and then split the rest of the money across the savings accounts as you suggested. Think that sounds better?0 -
Since you are with Halifax already.
REMOVED URLYes: the money can be in as many or as few accounts as you like, but you can have a spreadsheet or budgeting software (like others on here, I use YNAB) to "separate" the money into different pots. There are only a handful of accounts offering decent interest rates and the more physical pots you have the higher the risk that you start losing money by not getting the best interest on the actual amount of money you have.
Pincher, I set one up earlier this month! With Halifax
Thank you!
That’s a very good point bobobski that I didn’t take into consideration. More physical accounts will mean more headaches for me when trying to find and keep on top of all the changing interest rates! How many physical accounts would you suggest for me? 1 x everyday current account, 1 x saver and my ISA?0 -
NectarCollector wrote: »You already have a Help to Buy Isa (hopefully with Halifax) so that's the best option there.
Open a new current account (no need to switch) and put everything (all £15000 of it) into a Santander 123 account. you will earn £37.50 gross interest in month 1 (less your £5 fee) and when you have filled it up the the maximum of £20k you will be earning £50/month (less £5 fee) a potential of £600 a year max (-£60 in fees) + cashback from any household bills you pay - just contact the companies and ask them to take money from this account instead of Halifax so you benefit from cashback on bills.
You can keep the Halifax current account with 2 non household direct debits (that don't qualify for cashback with Santander) and have a standing order send £750/month to it from Santander, then have a standing order to return it back to Santander the next day. that way you also get your £5 from them and you earn interest on the 750 that would otherwise be going stale in there
Hi NectarCollector,Tesco, TSB, nationwide have no fees and are relatively easy to set up. How much is your total savings currently?
Yes I do!
Would I be taking full advantage of the Santander 123 account, bearing in mind a don’t pay any bills…? I saw a little segment from Martin on TV where he suggested that this account might not be for everyone now, especially since they upped the monthly fee?
I think I do need to switch Current Accounts though, as you get joining bonus’ now with most providers, right? The only thing that’s keeping me with them is the £5 monthly bonus and the fact I have never used anyone else haha.
The whole “cashback” thing is something I really don’t understand. Should I be looking into this and start taking advantage of these offers?
Thanks SG27
Currently I have my Reward Account with £3.2k in, Halifax Saver account which is 0.25% with £10k in of savings. And my Help to Buy ISA has £1k in. Each month I get paid £1.5k and spend say £400..
I have no bills, only a couple direct debits for - contact lenses, phone, Netflix, Spotify and gym.0 -
That’s a very good point bobobski that I didn’t take into consideration. More physical accounts will mean more headaches for me when trying to find and keep on top of all the changing interest rates! How many physical accounts would you suggest for me? 1 x everyday current account, 1 x saver and my ISA?
I don't think there's one right answer and it really depends on your circumstances. I'll explain what I do and hopefully that'll help.
I started with just small random non-structured savings, but once I kicked myself up the butt I opened the First Direct regular saver as the high interest rate really encouraged me to "pay myself first" and ensure I put in the max every month (in reality I didn't but I'd topped it up by the end of the year). The little I was able to save on top of that went into a TSB current account. Then when I started being able to save more, I opened the TSB regular savings account too - this ensured that all my money was in 5% and 6% accounts. Now that I'm able to save more than that, I'll be opening a Flex Direct and Flexclusive tomorrow (as the guys on here told me it's far quicker to do it physically in the bank, even though I'm an existing but dormant Nationwide customer). My FD regular saver has matured so I'll split the lump sum across the Flexdirect and TSB current account, I've opened a new FD regular saver and I'll keep up with the TSB regular saver. I'll then drip-feed into the Flexclusive from the FlexDirect and after a few months I'll be able to max that out too (it's nearly salary review time). This way I'm ensuring (a) I'm saving over £1,000 a month, (b) I retain a nice lump sum, (c) I have somewhere to put small windfall sums or "squeezy" savings as I call them (e.g. VSP challenge) and (d) it's all in 5% and 6% accounts.
Depending on how much you're able to save, something like this approach might be helpful, but it really depends on how much effort you're willing to put in. I've spent a lot of hours researching bank accounts, predicting spending and saving, calculating how many months I can drip-feed for out of lump sums before I can start to fill up the accounts again with my bonus etc.
The key is that money is money. Put it where it is working the hardest. You can label that money however you like, but the label shouldn't require you to take a lower interest rate. A simple spreadsheet can help you to keep track of the percentages of those savings which are allocated to different categories. I haven't mentioned above what my categories are or even if I have any, but I'd hope most on here would agree that for my circumstances my set-up is pretty good.
As I mentioned above, I have opened a Tesco account for annual expenses - although this "only" earns 3%, it's really temporary savings because I'll be spending it during the year, and mentally it helps me to keep (eventual) spending money separate from my savings. And I'll be moving the interest from that account to one of my 5% accounts, so I'm making that interest work harder than if it stayed where it was. So I don't think there's anything inherently wrong with having separate "jars" as you originally suggested, but my very long-winded point is that there may be a better way to create those "jars" than simply opening a raft of bank accounts. Having multiple bank accounts is no bad thing and indeed may be encouraged depending on your circumstances, but be a bit smart about which accounts and why you're opening them.
Hope that helps!!
P.S. Do not have a cash ISA - read around these forums and the main site for the personal savings allowance. I happen to be one of the people who will probably end up being hit by tax on interest anyway, because I'm a 40% tax payer (£500 PSA instead of £1,000) and I'm making my money work really hard so over the course of the next year or two I expect I will be earning more than that in interest. BUT 6% taxed at 40% is still better than the top 1.5%-ish cash ISAs.
Edit: Sorry, forgot your ISA is a HTB ISA - the one exception to my statement above about cash ISAs!0 -
Better, but for that part of the month between paying the last bill and topping up ready for most of the DDs going out on the 1st, my Reward account usually has just a few pounds. Of course if you're using the debit card you need enough to cover the possible spending. Using the TSB debit card with its possibility of cashback on contactless purchases would be better. You can keep the account topped up to £2000 by faster payment from Tesco, say.I added up my monthly expenditure and its about £ 400 a month out now, so I have a good chunk of money to be saving and distributing out! ..its just where to put it which is stumping me.
I will probably keep my Reward account down to £700-800 a month now and then split the rest of the money across the savings accounts as you suggested. Think that sounds better?
Where to out it? see Bobobski's post 20 for good ideas, and my earlier link for a full list of accounts to consider. TSB, Nationwide, Lloyds all have Regular savers as well as current accounts; use them even if it means reducing the balance in the current accounts.
Don't bother with Santander if you won't get rather more than £5 a month cashback on DDs. Use Tesco as first and second choice of 3% accounts.Eco Miser
Saving money for well over half a century0
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