Separate account?

[frugalone]

How many of you keep your money for things like groceries, gasoline, toiletries, etc. in one account (or even pay on a cash basis) and "regular" expenses (e.g. insurance, heating bills, phone bills) in another?

I used to do this years ago. I think I read about it from someone's budget program. It was a sort of Excel spreadsheet that helped you figure out a year's expenses. The guy who designed it recommended having two checking accounts.

I'm thinking of going back to this method. Otherwise, it seems like there is continuous overspending on the food budget. I do wonder if it would be better to just put the money in an envelope and be done with it.

Thanks!

[Gardenarian]

I use a checking account for regular expenses (monthly bills) and pay for almost everything else using a credit card.

I have used the envelope method for saving in the past and it is VERY effective.

[decemberlov]

I don't have 2 checking accounts but I have a savings and checking account that i flip money back and forth between the two.
I have an excel sheet that tells me how much to put in savings each week for what bill. Most bills are divided in 4 and each week I will move a 1/4 of the total bill over to savings until the due date comes up, write a check and flip the money back to the checking account.

[SteveinMN]

Our budgeting program uses an "accounts" metaphor (DW's paycheck account feeds our joint account which disburses to the utility company, etc.). It's double-entry bookkeeping, so ...

In addition to our joint credit union account, we do have separate bank accounts for our rental property, my photography business, DD's wedding fund, and a couple of individual savings accounts we keep for our discretionary spending. Since the CU doesn't charge for any of these, it's an easy way to keep major categories of spending separate.

[awakenedsoul]

I think I remember reading one of Mary Hunt's books and she recommended having a second checking account as a "freedom account." In that you kept your money for property taxes, home maintenance, car repair, insurance, etc. In other words, the bills that you don't pay every single month. I would keep your grocery money in an envelope. I used to overspend on groceries, too. I think I did it to make myself feel better when I was working so hard. Now that I stockpile, buy in bulk, and grow most of my produce, I spend 50% less on groceries. It really helps the budget, since food was one of my biggest expenses.

[Blackdog Lin]

We only maintain one checking account - all monthly expenditures come out of it. We do have a freedom account (along with vacation, emergency-fund, and side-business ones), but they are all savings accounts. I funnel monies monthly from the checking account to the various savings ones, which don't have outflows very often.

[awakenedsoul]

Actually I do what Blackdog does, too. I keep my money for the year in and ING account. (Well now it's Capital One.) I withdraw what I need for the month. In the beginning of the year, it's $1,000. because I get the big bills out of the way. (Property taxes, home insurance, water bill for the year, etc.) After that I try to make it on $500. for the month. Sometimes I need more, but that way I don't overspend.

[Spartana]

One checking account to pay household bills like utilities and cash for everything else. Cash for me, because I no longer track my spending, means at the beginning of the month I take out the amount of money I have allotted myself to spend that month (usually $600/month) for food, gas, entertainment, and extras. I put that in an envelope take out a little bit at a time as needed. Anything left over stays in the envelope and is added to the next month. Usually I have a surplus but it varies. I use a CC when I travel and pay it off in full when the bill comes or pre-pay it before I leave. I only use a CC for hotels, flights and car rentals - everything else is cash.

[Zoebird]

We have money market, savings, business, business savings, checking, and DS's savings. We have the IRA/mutual fund and also the CD that we play with each year in October.

We felt that having two checking accounts (one for "fixed" like rent/insurance/etc and one for more changable things like food prices) was too difficult for us to manage and a bit too confusing for us to really manage it. Instead, we find it easier to manage in a single account, and we actually have a part of our banking online stuff that help us see what is waht week to week (ie, we can compare the "grocery store" bill one week to the next. We also save a month's worth of receipts and go over them in the 4th week to see where we can make adjustments.

[pony mom]

I have one checking account, but have a notebook that keeps track of how much money is in there for what I need, like car expenses, horse, insurance, etc. This way I know exactly how much I have where. Every month, a certain amount of my depost gets delegated to each 'account'.

It's a lot to keep track of (on pen and paper), but it's been working for me for many years now.

[catherine]

I keep track via daily tracking in YNAB (YouNeedABudget). If I track spending every day it's really easy to see how much I have left to spend. Duplicate accounts and envelopes--I've tried that and it drives me crazy. However, I do have an ING automatic monthly withdrawal for a car replacement fund. I put the max into an IRA in another ING account, and my business expenses are in a business account, but everything else is lumped together in my checking.

[frugalone]

I've not heard of YouNeedABudget. I'll check it out.
As I am not "good with numbers", the simpler, the better.

[clara24]

For me that is a good idea that you have an list in an excel for you to make everything under control.In Helsinki some people really having difficulties on budgeting their money,some are getting pikalaina (http://24pikavippi.fi) or loan just to support their financial stuff and some are over spending and i think always having a list and following it might give you a lot of save money soon.

[SteveinMN]

clara, not to be rude (although I guess I am being rude), but is there any problem that cannot be addressed with Finnish loans that you always link to? Are there any other areas of simple living that interest you on this site?

[larknm]

Catherine, thanks for mentioning You Need a Budget. I Googled it but it costs $60 to get a copy to even find out how it works--the 4 steps. Would you feel okay about giving us a thumbnail of it, so we can get a better idea if it's right for us?

[SteveinMN]

Catherine, thanks for mentioning You Need a Budget. I Googled it but it costs $60 to get a copy to even find out how it works
lark, I went to the You Need A Budget Web site and found trial versions available for free download (http://www.youneedabudget.com/download). Apparently the free trial works for 34 days and then you either buy a license and keep using it or you're locked out of the program.

If you choose not to get a license, you probably can export what you've already put in so that you can import it into another program you want to use.

The page I linked also links to a quick-start guide and some introductory videos. So you should be able to get a good idea of how it works before plunking down $60.

[Zoebird]

Here's ours:

1. Business account (checking) -- we run all of the business finances in here;
2. Business savings account (savings) -- for 'freedom' things and/or reinvestment, etc;

3. checking account (fixed and fluctuating expenses. we run this one closely);
4. savings account (savings) -- this has suffixes (like separate accounts) which allows us to earmark savings in different ways (ie, saving up for another car -- to replace the current one -- saving up for holidays, emergency fund, and general savings);

5. money market account -- general savings fund that we basically don't touch;
6. IRA -- general retirement savings (mutual funds, various kinds of investments);

7. student-loan checking account -- basically the account where I throw the monthly payments into each year, at the beginning of the year, so that the bank can take the auto-payment (this account is at a separate bank, even).

We then also have several CDs that we roll over every year, and DS has a savings account and is about to open a checking account since he started selling some of his toys/etc on the local site (he chooses what to sell, and he has to put 1/3 in savings, then the remainder can go into checking and he can spend it as he pleases basically. He hasn't spent any yet, though. He's chuffed to have his own bank accounts.