Help piggybacking

wigglers

Hi
After looking at our finances I am looking to put our money in "separate pots" so I know exactly how much can get to paying extra on credit cards etc. I have had a Hsbc advance account for a long time with a small od of £50 for piece of mind...which some of the bills go out of. I also have a second account with hsbc and my partner has a nationwide account which a lot of our bills currently go out. (we predominantly set up as an account to transfer the "bills money in) she also has a Barclays current account and I have recently signed up for starling and noticed I can create pots... But if I pay all my wages into starling straight away will Hsbc get funny? Will it impact our credit rating at all? My thinking is I get paid transfer it to starling transfer from starling personal account to the pots... Then switch it back before the bills are due.. As some are beginning of the month and some are after the 12th when we get universal credit. I'm reluctant to switch as starling has no deal for switching current accounts and I've been with HSBC since I was a teen so looks good on a credit report. (eventually somehow we would like to save and try get a mortgage). I'm not sure what way to go about things and I'm obviously confusing matters with all these accounts... What's the best thing to do? Thanks sorry for the long post.. 

Jami74

I do something similar to what you are suggesting. My main account is with Natwest which all monthly payments (bills, savings, credit cards) come out of. Irregular spending (eg groceries, petrol) is done on credit cards (paid in full each month). I know by the end of the month exactly what my outgoings will be the next month. 

I get paid into Natwest mid month and transfer it directly out to a savings account. On 1st of the month I transfer the required amount back to cover all the payments for that month. 

I have a couple of different savings accounts where yearly payments (car insurance & tax, Christmas etc) go in each month, then when that money is needed it is transferred. Eg I pay £15 a month into a savings account for car tax, once a year car tax is paid by credit card and the money is transferred into Natwest ready to go towards that credit card bill. As my regular savers come to an end I plan to use one of the accounts that has pots rather than lots of different accounts.

wigglers said:

But if I pay all my wages into starling straight away will Hsbc get funny? Will it impact our credit rating at all? My thinking is I get paid transfer it to starling transfer from starling personal account to the pots... Then switch it back before the bills are due..

You need to check if your account with HSBC has a requirement to pay a minimum amount in each month. It's fine if it has because you're planning to transfer the money back in. I have a couple of accounts which pay a reward for paying in a certain amount each month so I just transfer money in and back out each month.

IvanOpinion

I don't understand this need to have separate physical pots for money - I often watch younguns spending hours on their phones organising their pots and accounts, showing me that they have just saved another 8p towards their world cruise... or that they have over spent on their pot for the cinema, but still have money in their pot for Pizza, but would have to borrow from their baked beans pot to get a side of garlic bread.

Keep it simple and don't micro manage.  Keep the physical location and usage separate ... it doesn't matter where the money is.  Use a spreadsheet to split the money up into main chunks (e.g. day-to-day, utility, holiday, car, stripclub or whatever).  Once you do this you reduce the risk of going overdrawn and can make the money work for you by getting incentive bonuses etc.

My own spreadsheet is now about 25 years old.  Life is too short to waste on micromanagement.

Jami74

IvanOpinion said:

I don't understand this need to have separate physical pots for money 

Keep it simple and don't micro manage.  Keep the physical location and usage separate ... it doesn't matter where the money is.  

You don't need to understand, you already have a way that works for you

I think for people who haven't been managing their money well they find it helps to separate it out a bit as they learn better management. I love my spreadsheet, but not everyone is spreadsheet literate, I certainly wasn't 25 years ago. An account with pots is a bit like an account with its own built in spreadsheet.

Hopefully once the op has organised their money and sorted out their debts it won't need micromanaging.

MovingForwards

I have different accounts (pots) for savings. Each pot is earmarked for something that may need / want money in the future eg structural work, new kitchen. I also have a couple of extra current accounts which have their own purpose (1 is everything to do with my car and home insurance, 2 is for an emergency plumber / gas person).

My monthly utility bill money stays in my wages account; I run a spreadsheet to budget and monitor savings.

Each payday a chunk of money gets distributed to the various accounts, then drive go over weekly eg when I've not been into work or spent less on food than my budget.

The only time chunks of money were moved from my then savings accounts was when I had to pay my mortgage deposit, broker and solicitor. Since I completed my purchase it's just something I kept going as it works for me.

Your rating isn't seen by any financial institution, only you. It's the credit history they see and use for assessing if they want to provide finance, plus other things on the application eg wages. Being on the electoral roll means they can electronically verify you.

Who knows what HSBC will think, or any bank for that matter.

Eco_Miser

IvanOpinion said:

I don't understand this need to have separate physical pots for money - I often watch younguns spending hours on their phones organising their pots and accounts, showing me that they have just saved another 8p towards their world cruise... or that they have over spent on their pot for the cinema, but still have money in their pot for Pizza, but would have to borrow from their baked beans pot to get a side of garlic bread.

My mother had a cash-box with ten or a dozen partitons in it - almost literally pots of money.

It helped her save weekly for quarterly (or monthly or annual) bills. I don't think pizza, garlic bread, baked beans or world cruise were in the categories though, just the things that these days go out by direct debit.

Having observed that method, and the juggling of coins and notes it involved, I decided on a simpler system, a single bank account with sufficient float to meet the payments as they became due.  Over time I acquired more bank accounts to get better interest, but it was always just one pool of money, covering both daily spending and a new boiler.

Which way is better?  Whatever keeps you in control.

wigglers

Does anyone that uses starling do this? Well my wages go into HSBC on the end of the month so it would hit the minimum pay in requirements... Just not really sure how to go about divvying up everything if I'm honest.. 

kuratowski

Beginner's guide to piggybanking:

You have 2 bank accounts, and you designate one for bills.  Set up all these bills to be paid by D/D from this account.  You don't use this account for anything else.

Add up rent or mortgage, council tax, electricity, gas (if applicable), water, tv licence, phone/broadband, and any other bills you pay every month (e.g. life insurance).  Every month when you get paid, immediately transfer this total into the bills account.  Whatever is left stays in your other main current account and you can spend it knowing whatever happens your monthly bills are sorted.

The problem with this simple approach is you haven't taken account of things you pay for not monthly but once a year.  What about home insurance, car insurance, car tax and MOT, holidays, Christmas, annual memberships (such as national trust), dentist.  Work out how much these are per year, and divide by 12 to work out the monthly equivalent.

So the next level of piggybanking is to keep track of all your spending for at least 12 months, and work out how much it comes to in each category of spending, and then every month, set aside the monthly equivalent in a dedicated "pot".

You might use separate bank accounts, or you can stick to one single bank account and track the pots another way, as already mentioned above.  Spreadsheets work, or you can use a software system to keep track of the pots, such as the ones that come up in the regular threads with titles such as "budgeting apps".  The one I use is YNAB, for what it's worth.

Now you are a money management pro, and you can take this as far as considering things you pay for only once every few years, such as replacing the washing machine, home improvements, new pair of glasses, new phone, replacing the sofa, and so on.  And then we come to the truly long-term thinking: saving for retirement (pensions), investments, etc, maybe you could allocate a monthly amount towards each of these too.

You can make it as complicated as you wish to, but it's also perfectly viable with two bank accounts or even one.

[Deleted User]

I helped setup piggybanking a friend who has money issues partially due a mental heath condition. Her income goes into a current account (123 Lite) which has her direct debits. She leaves the value of all her bills + 10% in the main current account (plus any residual balance) and transfers the remainder in Monzo each month for spending.

This has stopped her bouncing Direct Debits plus she gets some 123 cashback. She also has a small buffer which we've used to start dealing with her multiple high APR credit cards that she previously kept taking out.

See what works for you.