Piggybanking techniques

MSE_Eesha

Do you use Martin's piggybanking technique to stick to a budget?

Martin's piggybanking technique

Or do you have your own methods for saving cash in different pots?

Share your experiences below.

Brambleberry

Hi I'm a super happy Brambleberry this week!

I will be entering 2015 with a zero cc balance and all my piggy banks up to date.

I've been running my own form of piggybanking this year using 14 different "pots" within one bank account and using a spreadsheet to plan and track my spending. It's a method evolved from the America's MoneySmart family system, I have a plan for each month's salary and allocate it to all the different categories of my budget, including savings.

In the beginning it took a couple of months to equalise due to some annual bills coming in, so I effectively had overdrafts within my virtual pots, but my overall current account remained in credit while each piggy bank got filled. I looked at using different banks or accounts, but this system is much easier for me, because it's easier to track one current account balance.

This will be the first time in over 10 years that I am not in consumer debt in January, so I am looking forward to making greater savings next year.

Best wishes for a canny 2015:)

kansaskitty

I have always had two extra accounts for Car Expenses and Heating Oil but this year I have really started extreme piggybanking (!) and I am feeling really chuffed with myself and like it will help me to keep on track financially for 2015, as we are expecting our first child this year.

I use Halifax as we are really happy with our current account, we can see our mortgage online and we are happy with our fixed rate, and it's great for piggybanking as they offer unlimited Online Saver accounts. I now have a current account for the wages to go into and bills to come out of, plus ten piggybanks:

Car Tax/MOT
Veterinary Expenses
Heating Oil
Christmas/Birthdays
Holidays
Work Clothing
Dentistry/Optical
Household Maintenance
Baby Savings
Disaster Fund

Then a different current account for all of the surplus to go into which is our fun/leisure spends for the month, so we know that what is in that account is to spend as we please, without worrying what else is left to come out.

Here's hoping this can help us to be financially secure in 2015!

Dobbibill

I have a number of piggy banks too and it works brilliantly for me

My OH does not do budgeting and is quite happy to be given a figure to pay into the bills & grocery acc's each month, every thing else is moved either via SO or manually

Current piggy banks are:-

* Bills
* Groceries
* Emergency fund
* Birthdays
* Christmas
* House savings (big purchases/repairs)
* Individual spending (our own sole acc each)
* New Car savings
* Treats (cinema/days out/meals with mates)

This has been passed down to my DS's who also have a piggy bank method going, including my youngest DS who has just gone off to uni he has his student finance in one acc which is converted into a weekly budget, this then feeds

*spending acc
* bills acc (rent/mobile phone)
* car savings (ins/mot/repairs)
* ISA (savings from p/t job)

other DS's have an overtime/overflow acc which is funded by any overtime or anything left over from their weekly budget which is not accounted for this then goes towards any treats without impacting their regular spending money

Just goes to show it works no matter what age you are

jimjames

Good idea in principle but for a brand new article it's a little out of date to suggest using savings accounts with tiny rates. Surely if you are going to the effort of setting up additional accounts it's worth getting the ones that pay the best interest rates.

bassitt74

Brambleberry wrote: »

I've been running my own form of piggybanking this year using 14 different "pots" within one bank account and using a spreadsheet to plan and track my spending... I have a plan for each month's salary and allocate it to all the different categories of my budget, including savings... I looked at using different banks or accounts, but this system is much easier for me, because it's easier to track one current account balance

Yes, yes & YES! So pleased to know I'm not the only one to do exactly this same method. People at work think I'm "financially strange"!

I also ask for receipts for everything I spend money on. Then each month I print off my bank & credit card statements, enter my spending entries into a spreadsheet and cross ref against the statements. Then I can see which entries are for online spending and enter those into the spreadsheet.

End of 2014 I managed to match ALL my spending and for the first time have an absolute clear picture of what's going on. Cancelled 3 annual payment subscriptions I would have otherwise missed (one was for £349!!!), cancelled my spotify account (saved £120) & cancelled my entertainment pass with now TV (another £72 saved).

I can see where I impulse buy, under/over budget and adjust my budget accordingly. I always say restriction is more palletabe when it's self imposed.

bassitt74

jimjames wrote: »

Good idea in principle but for a brand new article it's a little out of date to suggest using savings accounts with tiny rates. Surely if you are going to the effort of setting up additional accounts it's worth getting the ones that pay the best interest rates.

I'm not too worried if it's spent inside 12 months. I put the savings used for single annual payments such as car insurance into the account with the highest interest and use the lower interest accounts for spending with 2-3 months. Any monthly payments go into the bills account. Any surplus from all accounts at the end of the year goes into my isa along with my regular monthly savings.

This is my 2nd year of planning my finances this way. I used my first year as a sort of training ground to get into the correct habit and it takes a full year in my opinion to work out a budget because first you have to 'live' your budget. Now I feel I'm in a good position and practice to start being wiser about selecting the best accounts to save into.

Chrisblue1962

I think Piggybanking is a great idea but for many folks it may take quite a while, maybe even a couple of years to pogressively build up funds to initialise the switchover from paying a bill by monthly payment to paying by lump sun funded by piggybanking as there may not be enough monthly income to pay a bill AND save up for it at the same time.

bassitt74

Chrisblue1962 wrote: »

I think Piggybanking is a great idea but for many folks it may take quite a while, maybe even a couple of years to pogressively build up funds to initialise the switchover from paying a bill by monthly payment to paying by lump sun funded by piggybanking as there may not be enough monthly income to pay a bill AND save up for it at the same time.

Yes, very true. It took me a while. My advice is to start with 1-2 accounts first (maybe something smaller like birthday presents) but you must start. I think that's the important bit. You can't jump straight in and expect to do it all at once.

It took me 4 years before my car insurance came down to just under £300. Then I just bit the bullet, paid in a lump sum, opened an instant saver and divided the amount I'd just paid by 12 to work out my monthly savings (paid by standing order)

The next annual payment I tackled was the car service/ mot/ repairs about 9 months later. They all get done at the same time. So once I'd paid I totalled everything up, divided by 12 and opened up another instant saver.

I used the same method throught the year tackling 1-2 areas at a time as they cropped up. Now I have 1 account for monthly payments, usually bills, an isa for regular monthly savings and 10 instant access savers for all my other spending throughout the year, everything from hairdressers every other month, clothing every 6 months, to car insurance.

Start small but start.

P.A._Ranoia

Piggy-banking is a great technique and I use it very successfully. But I am afraid I am posting problems / questions rather than solutions / tips:

Martin's advice is: "Interest here isn't that relevant, as the amount of cash you'll have in it (the piggy bank P.A.R.) should be relatively limited as money in bills accounts tends not to stay there too long once paid in." I guess this will usually be the case but occasionally a significant sum will accumulate in a piggy bank due to luck / good management (well we can all live in hope). The only solution I can come up with is is more or less as bassit74 describes above; set a maximum balance for each piggy bank and at programmed revues transfer any excess to a high interest account. How do others deal with this, is there a way to automate the process?

Other posters suggest managing a number of pots within one account. I suppose it is a case of whatever works for you. Personally I suspect that if I was sufficiently self-disciplined to undertake the regular accounting action described *in the long term* I would not need a piggy bank system in the first place. So I will stick with multiple accounts.

My main concern is relationships where one partner sees no need for financial discipline. Although not relevant to my situation I know cases involving either sex. This is not necessarily malicious, they are just not wired up for delayed gratification, they are the kids who ate the marshmallow immediately in the Walter Mischel test. It is no good putting money in piggy banks if the other half immediately withdraws and spends it. Dual signature accounts are unpopular with banks and building societies. Can anyone suggest solutions?

Finally, if I have understood proposed changes to the law correctly, paying a partner an allowance / restricting access to money is to count as domestic abuse. In situations where one's better half, of either sex, is not concerned with managing money this sounds like a recipe for disaster. (I imagine if both of you do not see any need for financial management you will lurch from one emergency to the next but since you will not realise why it will not concern you other than momentarily.) Have I understood the proposed changes correctly?

Archi_Bald

P.A._Ranoia wrote: »

Dual signature accounts are unpopular with banks and building societies. Can anyone suggest solutions?

This one seems to be the easiest of issues to solve/prevent: don't have joint accounts. Money for joint expenditure doesn't have to sit in a joint account.

P.A._Ranoia wrote: »

Finally, if I have understood proposed changes to the law correctly, paying a partner an allowance / restricting access to money is to count as domestic abuse.

Maliciously restricting access to money - if that can be proven - should obviously not be allowed but I can't see anything wrong with paying a partner an allowance. It seems a perfectly valid financial action e.g. when one partner pays all the bills, does all the food shopping, pays all the insurances etc etc etc. It would be ridiculous if you weren't allowed to pay regular amount of money to your partner.