Best way to have 'pots' to budget from?

jignator

gsmh said:

I use Money Manager EX, a free finance app for Windows and Mac, and I create an account for each 'pot' I need. All I do is transfer money into it from my main account, but never mark the transfer as reconciled. When I need to use the money, I transfer what I need back the main account and then it is available to use. By not marking these transfers as reconciled, the reconciled balance of my main account will always tally with what my bank says and the overall balance will be what you have, minus the pots. It is so much easier to do than to explain.

Oooh like it! One to look into, thank you for sharing much, much appreciated! This is what I came to MSE for 😁

jignator

I have what I need now, mods may now close this post as I won't be checking back. Thanks all!

MovingForwards

@jignator it's something I did when saving up for my mortgage deposit and associated fees, as it worked well for me I carried on after getting my keys.
Some of my accounts let me set goals. With the mortgage EF I plan to have a full contractual payment saved every 5 months, meet that then up my goal for another month within 5 months. Others I've got set for 2 years and put a token £20 in each month. Some I have a 5 year goal. 

With savings I treat them as another bill, transfer the money payday / 1st of the month. If I've not gone into work that week (I'm WAH) then I transfer the weekly commute costs into various savings. If I've not spent my full weekly food budget I transfer the surplus into savings too.

It soon builds up and I don't earn loads.

colsten

jignator said:

 If I read your post again, 'you need to have words with yourself' is not very constructive, I am sure you will agree? 

No, I will not agree. To the contrary, if you really meant " how much we should be spending in any given month", I would repeat that you should have words with yourself. 

IvanOpinion

jignator said:

Wow a lot of people not liking the idea, life is too short for separate bank accounts with money automatically going in but not for a spreadsheet you have to manually update? We already have a spreadsheet so know how that works. My question is not for advice on our tactic but on what platforms help us to do what we plan to do, thanks though. If anyone out there uses monzo or another digital banking app, please let me know! 

Given those parameters then I change my answer to ... many banks now offer this feature.

Natrc

jignator said:

Hello all, hoping someone has tried to do similar and will be able to advice - I have done a bit of my own research too. Essentially, my partner and I are soon to be living together and will need a joint account for bills etc. However, our ideal is to have three different pots - bills, food and household and leisure so that for example each month we can put in equal amounts of money into each 'pot' and then we know what it looks like for the month and the year - the run rate and how much we should be spending in any given month. This may be overkill for some but it is how we envision managing our money so just need advice on what is the best way to execute this please. We thought we will create three joint accounts under one bank and then be able to manage in one bank/app for the three pots and that may be easiest. Looking at monzo, their 'pots' are not for what we want to do I think - does anyone know different or have any other ideas or other digital banking apps to consider? We don't want pots to save money as such, all three pots will very much be used on a weekly and monthly basis. Thanks in advance!

When me and my partner moved in together we took out a single joint account, the more accounts you have the more complex or gets in my opinion.

What we did is set up a joint Google docs spreadsheet, which allowed us to see our budget. We then would have a column for the total budget that month, and a cold for what we had spent which we would update about once weekly for things like food shopping etc. it was colour coded so green was full amount left, yellow was over half left, orange was under half left and red was spent. This helped particularly my husband know what was going on. 

When I was a student I had different accounts for different things, and it was just super complicated. For example all of my annual spends (Microsoft office, car insurance) went into one savings account, my months spends went into another savings account, the actual savings went into a third joint savings account and then I had my personal and our joint current account. It was a nightmare and I was constantly moving money around and would often end up accidently spending money on one account when I was meant to use the other. Also in terms of loans/mortgages in the future, it is better to streamline your finances so they are easy to understand to outsiders. 
Having done both the multiple accounts and the spreadsheet method, I find the spreadsheet method most useful and less annoying. 

LadyWithAPlan

Hi I have lots of pots in Monzo and also in another bank acct, it works brilliantly for me. Hopefully you sorted out your budget best practice now?   I do a paper based budget at the beginning of each month, adding money to each category and I have been doing this for over a decade. 

My pots include vacation savings, food, dues, savings, hair, toiletries, entertainment, restaurants, clothes, office supplies, taxes, emergency fund, upgrade my tech pots, annual dues.

Some are sinking funds so I am saving for the future eg my future tech fund as I don't replace my laptop or phone every month but I do add in it £40/month so I can buy replacements easily. 

When I broke my phone last year I just went and bought a replacement in cash from my pot - spending cash and having to move it out my pot meant I was also very clear on the costs - I looked at the contracts to get the most up to date iphone  but  at £80 per month for 2 years etc ... it is very expensive so decided i would rather not buy the top of the range phone either by contract or cash but one for a £260 and have a  a sim only  contract, saving myself over £1000. I had the money to do so but it was clearly  a choice that did not go in line with my money goals so ...

With pots where I need to use it eg the food pot,  again at the beginning of each month I add to them the correct amt for the month say £200. If I then spend £30 in sainsburys on my debit card I just move the £30 cash from my grocery pot to my main bank acct. that paid.  I also like to grab cash out say £50 a week (moved from my food pot) and once that £50 has been spent only on food I then need to decide clearly  if I will break my weekly budget.

 I could do a spreadsheet and plan to try the idea of the annual look over, but I have been doing this long enough to now be pretty clear on what is coming.

When I have a big vacation coming up or large expense I start savings towards it months in advance eg I know I have a £300 to £400 dentist bill next month .. filings etc, so I put £250 away this month in my health/dental fund and then £150 in September.  Any excess I either leave in or move to my savings.
I do have Quickbooks so I use that for tracking the savings.

Rich1976

We tried having several pots and in all honesty they just didnt work for us at all as we found our money was spread too thinly across all the pots we wanted to have.
We re-designed our system last year so now we have combined all our finances into joint accounts and our household spreadsheet is based on one overall household income rather than joint and separate budgets.
We have one current account that both incomes are paid into and all direct debits and bills paid from in the first few days of each month. We leave a buffer usually for when we need to use cash
Our weekly shopping, petrol and fun money is put on a credit card which is paid off in full on pay day. I keep track everytime the card is used and keep a running total against the relevant category on my spreadsheet so I know how much is being spent and if too much is going to fun money we can reign it in until next month.
We also used to have multiple Savings pots but now we have just 2 accounts. The first one is for all our yearly Expenses, so car insurance, home insurance, council tax, water, breakdown cover, TV Licence etc. £300 is moved to this account without fail on payday and this covers all of the above.
Our second Savings account houses our 8 month emergency fund  and we also pay into this each month for things we are saving for so would cover home Improvements, any car repairs, holidays, replacement car etc. We dont  have fixed budgets  for these  anymore. 
Finally we have a fixed amount going into our investment Isas each month.

Keeping things relatively simple works for us as we found having set budgets for everything became too rigid and regimented so the above allows flexibility whilst ensuring our goals can be met

jignator

Hi all, literally just logging on to update on my initial thread - for the benefit of anyone else who may come across this thread and is considering doing similar to us. 

The background: My partner and I live together and have been soon since I posted here or soon after. We both work full time (both decent but not high salaried office jobs), we don't have children and we have a joint mortgage. We wanted to put our money into pots so we created three different back accounts and we review the amounts as and when we need to (once to twice a year). 

We created three joint accounts and money is just direct debited from our personal accounts into these accounts:

1. Bills - used for water, gas, electricity, council tax etc.
2. Leisure - used for any meals out, holidays - inc spending money etc
3. Household costs - used for the weekly shop, any home repairs, misc. household costs

In order to decide what we put into leisure and household costs, we worked out all our incomings and outgoings on a excel sheet and simply thought about what % would we be happy to allocate to these pots of our income - also bearing in mind what we can actually afford to. We then both have disposable income leftover after all this but minimal - just enough to buy gifts, any personal costs and personal shopping, personal car costs etc - because we are also keen to put money aside and save so that we have a savings pot too for a rainy day plus to save for the future when we start a family. 

Outcome: This system works INCREDIBLY WELL for us. We are so pleased we did it. Also, we monitored our Experian credit score throughout this process - both before, during and after opening the 3 bank accounts and am pleased to say our score is a perfect 999. So no impact on the credit score either. I would highly recommend this system of pots and a basic annual review on an excel sheet of your finances. We like to stay organised and this has just made it so much easier. Hope this helps someone out there! Unfortunately I won't be checking back for any responses but all the best to anyone reading this. Hope you find what works for you!

Nasqueron

jignator said:

Hi all, literally just logging on to update on my initial thread - for the benefit of anyone else who may come across this thread and is considering doing similar to us. 

The background: My partner and I live together and have been soon since I posted here or soon after. We both work full time (both decent but not high salaried office jobs), we don't have children and we have a joint mortgage. We wanted to put our money into pots so we created three different back accounts and we review the amounts as and when we need to (once to twice a year). 

We created three joint accounts and money is just direct debited from our personal accounts into these accounts:

1. Bills - used for water, gas, electricity, council tax etc.
2. Leisure - used for any meals out, holidays - inc spending money etc
3. Household costs - used for the weekly shop, any home repairs, misc. household costs

In order to decide what we put into leisure and household costs, we worked out all our incomings and outgoings on a excel sheet and simply thought about what % would we be happy to allocate to these pots of our income - also bearing in mind what we can actually afford to. We then both have disposable income leftover after all this but minimal - just enough to buy gifts, any personal costs and personal shopping, personal car costs etc - because we are also keen to put money aside and save so that we have a savings pot too for a rainy day plus to save for the future when we start a family. 

Outcome: This system works INCREDIBLY WELL for us. We are so pleased we did it. Also, we monitored our Experian credit score throughout this process - both before, during and after opening the 3 bank accounts and am pleased to say our score is a perfect 999. So no impact on the credit score either. I would highly recommend this system of pots and a basic annual review on an excel sheet of your finances. We like to stay organised and this has just made it so much easier. Hope this helps someone out there! Unfortunately I won't be checking back for any responses but all the best to anyone reading this. Hope you find what works for you!

Well done on sorting all that out

Just FYI the "score" is a gimmick, no lender ever sees it and it is never used in any lending decision, please make sure you do not ever pay for their "improvement" service or boosts or anything to change the novelty number they give you