how to set up/organise bank accounts?

Legacy_user

Hi,
In the New Year I'll be looking to try and budget a bit better (!) and I will also have different amounts of money going into my bank account compared to before. I thought it might simplify things if I were to have two accounts, - one for the food and grocery shopping and one for my own stuff, otherwise I am going to struggle with trying to work out how much I have spent and how much I have left in each category.

Hope it's not a silly question, but I was wondering what would be a good way to go about this? Do people who want to compartmentalise their money like this have more than one current account with the same bank, or do they have current accounts with different banks, or is there a way of having just a basic extra account, with its own card, with the bank you're already with?

At the moment I have a current account with one bank and a small savings account with another, unaffiliated bank. The savings acount does not have a card with it, so it wouldn't be all that practical if I wanted to do an online shop for something.

I don't have any debts except for an old student loan which is being deferred, but I am on a low income.

FireWyrm

Not a silly question at all.

I'm paranoid, so my finances are spread across various banks. I have the following :

1) Natwest current account (no overdraft) - takes a stipend of £400 a month for food and fuel. Useful because of the mobile app allowing me to know at a glance how much there is to the penny.

2) Natwest (x3) savings e accounts - labelled as emergency, house, overflow. These take various DDs and transfers from other accounts. Useful because they are savings, they have their own sort code and account number but no other facility but transfer in and out. Hard, but not impossible to get to.

3) HSBC Current account (with overdraft) - takes incoming wages and makes outgoing bill and other account transfers. Primary staging ground for all money.

4) Tesco e-saver (no facility except transfer) - sole purpose is to hold Christmas savings. This doesn't get touched unless the world ends. Very hard to get to.

5) Co-Op Cash Minder (no overdraft) - takes a stipend from HSBC which is my incidental stuff like kids shoes, birthday presents, odd eBay purchase etc. Useful because it has a debit card and all the same useful stuff, but has a finite amount of money in it. I can't go overdrawn etc.


The above sounds horribly confusing, but all I really need to remember is to use the purple card for food and the blue card for 'not food'. Everything else pretty much runs itself.

[Deleted User]

Hi avogadro
Like FireWyrm, I have several accounts all with the same bank as there is no where near the upper limit and I like to see on one online banking list what I have. The only one that is not with the same bank is my 1st Homebuyer account but that is due to the interest rate!

Bank Accounts
Platinum Current Account - main account, Salary, Direct Debits, Standing Orders all out this account
EasyCash - Weight Watchers salary gets paid into this and is a back up account, try not to touch this.
Food and Fuel - As it says for Food and Fuel only

Mortgage
1st Homebuyer
ISA
These accounts will b closing when I move into my flat in a couple of months time as they are my deposit accounts.

Savings
Car - For all things to do with my car
Emergency Fund - As it says on the tin!
Gift Fund - For Birthday's and Christmas
Holiday - As it says on the tin!
VSP - My Virtual Sealed Pot rounding down my accounts each week.

Nieces savings
Niece 1 - Savings that my brother and SIL don’t know I have, will give her the money I save on her 21st birthday.
Niece 2 - Same as Niece 1

P
X

Ammeretto

Im the same too
i have several accounts with the same bank Natwest

Main account - wages get paid into and D/D's come out of

Spending account - monthly allowance for food and fuel

First reserve account - where birthday and Christmas money goes each month. This is like a savings account so earns interest

All the above accounts have debit cards. so i have a purple card that says spend account, a purple card that says main account and a blue card for the pressie account

I then have savings account for

Emergency fund
Debt over payments - i put money in here throughout the month. at the end of the month when i know that i don't need to use the money for anything unexpected i transfer it to a debt.

Car and bike account - for things like insurance, tax, mot, service etc.

DS1 savings account
DS2 savings account

I also have an account with Lloyds. I don't use this account all i do is transfer £4.50 every month for the account charge (mobile phone insurance and AA breakdown cover and travel insurance)

rising_from_the_ashes

Joining the gang!:

I have a couple of extra (and very small) savings accounts with other banks but my everday accounts are:

Bank 1

Main account - salary goes in, transfers done to various other accounts & c/card paid from here

Bills account - transfer set amount on payday, all d/debits come out of here & don't use it for anything else

Savings 1 - House & Car covers house insurance, emergency fund, advance landline rental, car insurance, car tax & maintenance, service etc & fuel

Savings 2 - Others covers dentist, hair, optician, clothes, presents & holiday

Savings 3 - Pets

I can transfer amounts from the savings accounts to my main account (and vice-versa) to cover the amount spent on the c/card that month


Bank 2

Basic bank account that I transfer a set amount to on payday (from main bank account) and this is my spending money for the month

Just started this but hoping it'll help reduce the OD a bit as I won't be taking any cash out my main account!

FireWyrm

rising_from_the_ashes wrote: »

Just started this but hoping it'll help reduce the OD a bit as I won't be taking any cash out my main account!

Ditto. I came to the same conclusion and so far it seems to be working. For the first time in ages, my HSBC statement was less than half a page for the whole month. It also means that I cannot physically spend any money on food or fuel until all the transfers have run through which (depending in the day) is somewhere around the 2nd of the month. I can't overspend, because there isn't an overdraft, I have to physically check how much is available before I spend it and play financial tetris for the month to make it all fit into the budget. Anything left on the last day of the month gets shunted unto one of the linked savings accounts (emergency fund) and left there. A new parcel of money turns up on the 2nd and around we go again.

rising_from_the_ashes

That's fantastic news FireWyrm :T this is the 1st month I'm trying this (only opened the new account this month) so fingers crossed it works for me too!

System

Thanks for all the replies. My banking seems so basic compared to others, as I don't have a mortgage (I rent) and I have just the 2 accounts. I guess I'm not that savvy when it comes to finances!

So, I could go to HSBC (where I have my current account) and ask for an extra account with a separate card? That might make sense, as I then wouldn't need to open up a brand new bank account with another bank and go through the rigmarole of having to take in all the documentation, etc.

Or, I was wondering about setting up a current account with Lloyds, where I have just a basic savings account. Some banks have a minimum amount of money you need to be depositing into the account per month, I think (?) and I only have a low income so I'm not sure if I'd be able to do this.

Or I could possibly set up a post office account..? We live a bit out in the sticks and there's hardly any working cashpoints around here, or banks, but there is a post office.

FireWyrm

Go for simple accounts with no fees. You don't want to end up paying for it. None of my accounts require me to pay in a set amount of money.

I would go for different accounts with different banks for purposes because you don't want to accidentally grab the wrong card and pay for something. Different banks mean different colours and you have to be really not paying attention to confuse Natwest with Co-Op.

Also, I know you'll probably laugh, but different banks increase the chances that should one bank experience problems, you are not left high and dry. If I had had ALL of my money with Natwest, when they went down a few months ago, I'd have been up a creek.

System

thanks FireWyrm. I love the phrase financial tetris, btw But I've now got the tetris music going round in my head :rotfl:

Ilona

My take on it. A system that has worked for me since opening my first bank account.

avogadro wrote: »

Thanks for all the replies. My banking seems so basic compared to others, as I don't have a mortgage (I rent) and I have just the 2 accounts. I guess I'm not that savvy when it comes to finances! Having lots of accounts does not make you savvy. I have just one account and I am very savvy. The only thing you need to remember is to not spend more than you have coming in, that's savvy.

So, I could go to HSBC (where I have my current account) and ask for an extra account with a separate card? That might make sense, as I then wouldn't need to open up a brand new bank account with another bank and go through the rigmarole of having to take in all the documentation, etc. Sounds like a rigmarole to me. I have one bank statement every month, I can tell at a glance how much I have in there. There are a couple of standing orders, I know exactly what is going out each month.

Or, I was wondering about setting up a current account with Lloyds, where I have just a basic savings account. Some banks have a minimum amount of money you need to be depositing into the account per month, I think (?) and I only have a low income so I'm not sure if I'd be able to do this. I have a low income, my pension, every month it goes into my one account. I don't need to move money around, I would get confused with bits of money spread around in different places.

Or I could possibly set up a post office account..? We live a bit out in the sticks and there's hardly any working cashpoints around here, or banks, but there is a post office. Use the Post Office if it is convenient to you. My bank is four miles from my house, so that's convenient to me. I get my cash from there, I don't use any other cash points.

Instead of going to the bother of opening up other accounts, you could start keeping a money in and a money out book. Record all your incomings and outgoings. No need to separate pots of cash if you keep your eye on the ball. Make a note of how much, and when you expect money to go into your account. You have done well so far, just keep a watchfull eye on things.
Ilona