Account for Wedding Fund

denzyred_2

Hello everyone, after a bit of advice!

I have just got engaged (yay!) but now am faced with the big budgeting job of sorting out the funds to pay for said wedding. I need to open another bank account to manage the wedding fund. I was planning on opening a second current account and paying my salary into it, moving a set amount of money to my first current account to cover my normal monthly spending and therefore reaping the rewards of the new fandangled reward bank account. ie - pay in over £1000 and get a fiver a month and/or £100 bonus for opening the account.

BUT THEN!! i realised I have to use the switching service. Which defeats the object rather as I do not want to switch my DDs and SOs to my wedding fund account.

So..... i looked at savings accounts.... but I need an account that I can move money in and out of because obviously I will be paying for wedding stuff along the way. Therefore, any savings account that requires me to leave the money untouched to get any interest is a waste of time.

What shall I doooo??

our annual household income is approx £45K, we can pay in approx £400 regularly every month and then in addition overtime, monetary gifts, etc (which can vary between about £100 to £500 p/m).

I am currently paying off a £2000 credit card with Virgin but this is interest free and will be paid off completely by June.

Help!? xx

Loughton_Monkey

Firstly, if you go to 'premium' current acounts like Lloyds Vantage, or Halifax Reward, or Santander (5% up to £2,500) you do not have to 'switch'. OK, you won't get any £100 or so for switching, but I have all three simply to get my 4% on £7K (Lloyds), my £5 a month (Halifax), and my 5% on £2,500 (Santander). I use First Direct for my 'main' accounts, SO's and DD's and would not wish to move away from such a solid bank.

I would suggest, therefore, that you look at these and open some/all that would be appropriate for you to maximise the interest on your working capital/savings.

Personally, I don't advocate keeping a "special" unique account for specific purposes (like a wedding). OK, I fully understand that this keeps things 'tidy' but my rhetorical question in these circumstances is "OK. You have opened a 'good' savings account for your wedding. Fine. But if it's so 'good' then why not put all your savings there?". Or if the extra account pays no better or worse, then why do you need it?

To give you an example. Many of us "save" to replace their cars. I do this and call it "depreciation". In simple terms, I charge myself £X a month 'depreciation' plus a 'standard' interest rate. But I do this as a theoretical 'nominal account'. So by simply looking at what I have 'decided' to allocate to the car fund, I can tell you at any one time how much my car fund is 'worth'.

However, all my cash is invested across a wide range of accounts: Special bonus current accounts. Savings accounts. Fixed rate bonds. Cash ISA's. Notice accounts etc. If I want to know the total amount of cash I own, I just simply add up all the positive cash account balances and deduct the negative 'car fund'.

When I wish to buy a new car, assuming the nominal fund has reached the required total, I would then simply look across all my savings accounts, and withdraw the exact amount out of whichever seemed most appropriate at the time, and at the same time, reduce my 'car fund' to zero and start all over again.

This technique is similar to what a business would call "Hypothecation". In simple terms I look at it like this:

1. All spare cash should be 'invested' [or 'saved with interest']. Given the total available at any one time, devote your resources to maximising your total return, consistent with requirements for withdrawal, ease of access etc.

2. If any or all of total savings are for a specific 'purpose' (Holiday, Car, Christmas, Wedding, House Deposit, etc.) then simply nominate these amounts on a separate list/account.

denzyred_2

I want a "special" account for the wedding so its not in with my normal spending and therefore I won't spend it on my normal monthly stuff. I need it seperate so I keep it seperate.

I don't understand your car fund arrangement! I think its a bit above my limited financial brain? Although I do try very hard with my finances (and have been very good the last 3 months!) I do occassionally get myself in a mess. Which is why I want to keep the fund seperate from the rest of my private and household finances. I will look at the premium current accounts again and look to open one of them i think.

Thanks for your help.
Clare x

Loughton_Monkey

denzyred wrote: »

I want a "special" account for the wedding so its not in with my normal spending and therefore I won't spend it on my normal monthly stuff. I need it seperate so I keep it seperate.

I don't understand your car fund arrangement! I think its a bit above my limited financial brain? Although I do try very hard with my finances (and have been very good the last 3 months!) I do occassionally get myself in a mess. Which is why I want to keep the fund seperate from the rest of my private and household finances. I will look at the premium current accounts again and look to open one of them i think.

Thanks for your help.
Clare x

I'm sure you would understand the thrust of my car fund if you saw it. Simple, really. Maybe I'm not good with words.

I seem to recall when opening an ING account, they allowed, when setting it up, to set up to 10 'sub accounts'. Don't know if they still do that, but their interest is "reasonable" at the moment, but not the best. The good thing about it, I suppose, is that you could keep the bulk of your savings there and transfer quickly, and easily, between, say, Wedding Fund, Car Fund, Rainy Day Fund, Working Fund, etc..... without loss of interest.

samwsmith1

Was reading another thread and they recommended the Skipton BS range of saving 'pots'
http://www.skipton.co.uk/savings_and_investments/e-savings/my_savings/default.aspx
2.5% interest (Guaranteed to be 1.5% above base rate until 31/01/2012) and money can be paid in and out to your current account - I know this isn't exactly what you want to do, but could you not withdraw it in advance of needed to spend it and then put it in your banks esaver till the exact day you need to spend it?
Just an idea.

nomorerack

Loughton_Monkey wrote: »

I'm sure you would understand the thrust of my car fund if you saw it. Simple, really. Maybe I'm not good with words.

I seem to recall when opening an ING account, they allowed, when setting it up, to set up to 10 'sub accounts'. Don't know if they still do that, but their interest is "reasonable" at the moment, but not the best. The good thing about it, I suppose, is that you could keep the bulk of your savings there and transfer quickly, and easily, between, say, Wedding Fund, Car Fund, Rainy Day Fund, Working Fund, etc..... without loss of interest.

thanks for the info...this helps a lot :j

rmiller

I did the same thing when I got married and used the NatWest E-ISA. It was so easy. I set up a SO from my current account.

Congrats and have fun with the planning!