Could an extra bank account help us reduce debt?

jane054848

My boyfriend and I have been overspending every month. We hadn't been checking up properly and thought we were spending within our income, but turns out we were eating into the money that should have been reserved for the tax bill.

Obviously the main thing we need to do is spend less (!) and we have done a budget planner. But I think it was partly because money (salaries, bills) was always going out at different times of the month making it hard to keep track of what we were spending and how much we had left to spend. I think having two bank accounts instead of one would help us, but not sure how best to manage this. Can anyone advise what is best? Salaries and bills out of one account and a regular payment into a "spending money" account? But then there is also the issue of occasional big expenditures, eg weddings, buying a new fridge, holidays, etc - how to deal with this?

Woudl really appreciate advice, thank you.

tbourner

See my signature!!

We use 4 accounts:

2 separate personal accounts, those are ours and our salaries go in, we pay some personal bills from them, and have standing orders set up for the exact figures into the 2 joint accounts. Our 2 personal accounts therefore never go over or under the set figure (unless I've fluffed up the planning somewhere!).

2 joint accounts:
1st joint account has ALL our bills coming out, including mortgage, utilities, phone bills etc. It also has a budget set up so that I pay the right amount in to cover yearly things like MOT and tax, as well as things that are paid for 10 monthly or 8 monthly, we divide the yearly total cost by 12 and add it to the figure.
2nd joint account has a set figure going into it on the 1st of every month and is our spending money, this account has NO direct debits, standing orders, overdraft, nothing! Money in, we spend it, when it's gone we don't get any more shopping!! Simples.

Obviously you'd have to work out your own payments between the accounts, I could tell you ours but it would be different for everyone, we both pay into the 1st joint account but only Zoe pays into the spending account for example, it's just how my budget worked out.


We've been working this way for just about a year now and it really has helped a lot. It takes some number fiddling almost every month when I realise I haven't accounted for something. Online banking is a godsend!!
If it helps we have my personal account with Lloyds, 1st joint account with Barclays, and Zoe's personal account and the spending account with NatWest.

DarkConvict

That is a good idea tbourner. I see the first 3 accounts as been what i would do, but never considered a 2nd joint account for spending. :P

tbourner

Ooh also we have an ING savings account that I pay £20 into a month, this just about covers presents for everyone over the year, but you could do something similar and budget for holidays or whatever you can afford. We have credit cards that we're trying to pay off but we have enough on them if we had an emergency, so we don't save for those.

RenovationMan

We have two current accounts. One is just for our direct debits and standing orders and the other one is for everything else. When we get paid, we transfer £X into the direct debit account to cover a month's worth of the outgoings and then we know that all of our bills are taken care off and the remaining money is for spends. Over the years we paid in an extra few quid each month than we needed for all the direct debits and now we have an extra month's worth of money in there.

This means that the Direct Debit account is never overdrawn and all bills are paid on time. You could also have a savings account with the same bank and put all of our tax money into that and because it's not your main bank account you wont see the savings account whenever you log in and get tempted to dip in.

It's also great when you transfer to another bank for a deal (we're in the process of moving to Santander for £100 cash back). You keep you direct debit account as-is and transfer the account your pay goes into. There are no direct debits (well, we have our pay pal direct debit with that bank) to mess about with and so it's dead easy to transfer and snaffle the free cash.

jane054848

Thanks! I think you are both right - we actually need 3 bank accounts: one for monthly spend, one for direct debits, one to save for one-off expenses, which we can calculate on an annual basis and then divide by 12.

Really helpful replies. I think this is going to help a lot.