The Piggybank Technique

unknown_myth

Just a quick few questions about the Piggybank technique... (this quote I've taken from the main MSE website).

Step 2. Set up different bank accounts for different purposes

Now you know how much money you want to spend on different items, the aim is to make always knowing how much cash you have simple for you.

To do this, set up a number of different bank accounts, each with money in it for a different purpose, so the money's effectively in little pots. When you get paid or earn the cash, have direct debits or standing orders shift the cash over to them from your main bank account within a day or so of getting paid.

This is a bit like using a piggybank, putting money in different ones for different spending. Which accounts you choose depend on your own personal priorities and spending habits. Choose whatever suits your lifestyle and makes it easier for you.

OK - so using the example from the website, say that I want to set up accounts for Bills, Food, Big Purchases, Holidays, Christmas and Savings.

Am I then able to set up 6 accounts with the same bank to achieve these different Piggybanks? If so, which bank would people recommend? If not, then I'd need to set up 6 accounts with different banks or building societies? Would this then mean that I would need to set Standing Orders into each account that would like at least 2 or 3 days for the funds to transfer, and wouldn't it get just a little bit confusing with 6 different bank accounts to keep an eye on?

Either way, I would also assume that I'd have to invest in a larger wallet to hold my 6 Visa/Maestro/Electron cards...

HeadInSand_2

I have a Barclays account with around 5 sub accounts - I have 2 Connect Debit cards (One of the accounts was my old Woolwich account which migrated to Barclays, so is a full Bank account in its own right)
The rest of the sub accounts don't have cards or anything, I can pay bills/transfers and whatnot online through online banking with them and do pretty much what you describe above.

olly300

unknown_myth wrote: »

Am I then able to set up 6 accounts with the same bank to achieve these different Piggybanks?

Most online current accounts allow you to have a savings account linked to them so in fact you would only need 2 current accounts, 2 savings accounts with instance access and 2 savings accounts with not such easy access. You would then end up with 2 debit cards where you would need to remember the PINs off as the rest may not give you a debit card or you won't be using the account frequently enough to need to remember it.

unknown_myth wrote: »

If so, which bank would people recommend?

I know Nationwide allows people to have 2 current accounts. And each account will allow you to have an e-savings account.

Some banks are funny about people not paying their salary into their current account so you can just open a new current account, get your wages paid into that and not close your old one.

unknown_myth wrote: »

If not, then I'd need to set up 6 accounts with different banks or building societies?

You can use different banks/building societies and probably should for savings simply because then for your long term savings you would be able to get a better rate. And in fact for your long term savings you are properly better of using an ISA as it's tax free.

unknown_myth wrote: »

Would this then mean that I would need to set Standing Orders into each account that would like at least 2 or 3 days for the funds to transfer, and wouldn't it get just a little bit confusing with 6 different bank accounts to keep an eye on?

You get organised and transfer money across once a month when you get paid.

Also if you want to buy a big purchase, buy a holiday or spend for Christmas you plan it in advance and transfer the money over.

You only need to keep a close eye on the ones you spend money on frequently like food and bills.

unknown_myth wrote: »

Either way, I would also assume that I'd have to invest in a larger wallet to hold my 6 Visa/Maestro/Electron cards...

I have 3 personal current accounts, a business current account and savings accounts. I don't carry all my cards with me due to the number of loyalty, membership and credit cards I also have. So I have more than one wallet.

The method stops impulse spending.

unknown_myth

HeadInSand wrote: »

I have a Barclays account with around 5 sub accounts - I have 2 Connect Debit cards (One of the accounts was my old Woolwich account which migrated to Barclays, so is a full Bank account in its own right)
The rest of the sub accounts don't have cards or anything, I can pay bills/transfers and whatnot online through online banking with them and do pretty much what you describe above.

I (eventually) managed to get into my local Barclays branch to ask them about setting up this kind of structure and was told that they don't offer anything like this at all?

The best that she could recommend was a current account for my wages to be paid into and direct debits to come out of, and then a standing order of whatever money was left into a savings account. Or a second current account to transfer my direct debits into and leaving my wages in the first current account.

Has anyone else got a number of sub-accounts linked to one Barclays current account? If so, how did you get it set up to be like that?

annettetabs

I have 4 Step accounts with Natwest and have salary going into one of them and distribute the remaining money using online banking between the other 3 for different things, i.e bills, personal allowance, etc.

Richard019

When I bought my first place of my own I had no problems doing this with NatWest and from my limited experiance they seem to have the simplest online banking system. Admittedly I didn't have as many accounts to set up but I just went in, explained what I wanted to do and why and they pretty much did the rest. Without using credit cards (0% ones of course) this is how I'd have it:

I would suggest your 1st account had your wages into it and dealt with the food (that's the bit you have the most control over the cost).

2nd account would be your bills. Most of those will be standard amounts so you can set up a standing order and (if it were also with NatWest) know the money wouldn't be disappearing in the system for a couple of days.

Everything else can be with other banks as you need very little involvement with them on a day to day basis.

For Big Purchases and Holidays you're looking for as high interest instant access as you can get. You won't need a card as for either of those you'll know before you go to buy it that you're going to buy it so you can move the money into your main account in advance. To the same token you don't want to have a notice period on them if you're planning on booking at last minute to keep the cost down or if it'll cover things like replacement washing machines.

Xmas again you won't need a card. Xmas also isn't going to sneak up on you, so you could easily take an account with a notice period.

Savings would be best in an ISA.

hlg_2

Its not the top payer anymore, but ING Direct allow you to have lots of separate linked savings accounts - you just set them up, name them approrpriately and can transfer money in/out of your current account online or on the phone. Rates are not market leading, but not bad. Have this linked to your spends account.

Then set up a second current account (with a separate bank if needs be) for bills and mortgage/rent and your all sorted to do standing orders/DDs on your monthly outgoings.

Richard019

As a late alteration to my suggestions. Holidays you might be better with Nationwide. Their Flex account is the one with no charges/commission for using your debit card abroad. They also have an e-saver account that you can link to from it which is paying 5.3%. It's not brilliant but if you're more bothered about the simplicity then it might be more suitable.

Set up a SO from your main account to the Flex Account with one set up for a few days later from the Flex Account to the savings account. When it comes to going on holiday you can quite easily move the money back to the Flex account to pay for it/have spending money available.

heppy23

Mine is a bit complicated as I get paid weekly.

My wages go into my halifax bank account. I've just maxed out the overdraft to pay off a virgin card that was about to be put up to 34% APR.

Every week £200 leaves the halifax and goes to Yorkshire building society cash transactor account #1. This is the account where all the direct debits for stuff like internet, utilities etc come out of. From there £50 a week goes to egg money for petrol and general expenses. £50 a week goes into another YBS account where the direct debits for council tax and my pension come out of. Then another £50 a week goes to an old abbey instant plus account where I have weekly standing orders chipping away at all my credit cards.

I have been trying to set this system up for ages and the difficulty with it is that you have so much money floating around in the "ether" - well floating around in the BACS system. It wasn't until I took on the halifax OD that I could get a bit of money to "prime" all the accounts.
I plan to leave any spare money in each pot to try and allow each pot to build up a bit (or allow me to work out if any amounts need tweaking). When I've done that I will set up "sweeps" from each account so when each account hits a certain amount any excess will get transferred to the worst credit card. This will all be done manually by internet banking.

It all sounds complicated but my pension payment is more than half of one weeks money so "pension week" used to be hard as I knew a lot of that weeks money would vanish.

I am aware that I am not saving much "as such" but at the moment the priority is to pay off the halifax OD and the cards. No point earning 5% interest on money when I could be getting charged 34% on the card I am about to pay off.

[Deleted User]

olly300 wrote: »

I know Nationwide allows people to have 2 current accounts. And each account will allow you to have an e-savings account.

Nationwide will let you have more than one (not sure how many though) e-savings account per current account (I have 2).

RayWolfe

I can't find any info on the number of ESaver accounts they allow but I know it is many. Certainly enough for most people.