Salary in second account helpful?

Andyjflet

This works for me, my salary gets paid into my main account and I do a budget every payday, leaving the amount in there, plus small buffer, then I send money to savings in another account and then spends goes to my Chase account for the month, food, eating out etc and I earn 1% on spends with that. I use the roundup feature, as it hits £10 i send a payment to HMRC for a messed up PAYE issue with my last employer, this system works for me. 

enthusiasticsaver

Ak400 said:

Hi all, 

as I have posted previously I am struggling with overdraft most of my salary goes on rent, my sons nursery fees then paying off loans. I have some savings but not much left in another account.

i just wonder so that its easier for me to see what’s going in and out, is one idea I ask for my salary to be paid into my second account instead? Then I can pay whay I need to into the main account to cover bills, and try and see how I can then tackle the overdraft? 

It’s an idea in my head which seems a good one but I am not totally sure so just wondered if there are any pros and cons to this approach 

Doing an soa will show whether your salary is simply not enough to cover your essential bills or that you are struggling to budget.  If you have an overdraft the chances are you are paying 40% interest on that so tackling that is essential. 

The con of  having two separate current accounts are 

You will probably pay more interest on the overdraft as the money which would normally sit in the main current account waiting to pay out on bills is actually reducing the interest you pay as the overdraft is lower until it is time for the bills to be paid. 

The pro of keeping the accounts separate is by moving over the money to pay bills at the beginning of the month after payday means you know what is left to spend.  Of course there is still the danger of going into overdraft if your outgoings are more than your income.

I have a starling account and they have a bills space within the main current account so on payday I just move our bills money into that and then it is hidden and the bills just come out when due.  Hence it is like having two accounts but within one. However the chances are if you have an overdraft you are not with Starling or a similar bank which offers this facility like Monzo. 

I would start by doing an soa.