Typically, when we get paid, all of the money goes directly into our checking account. Then, if I think we have extra money that month, I will transfer some money into our savings account. When I pay bills, it all comes out of the checking account. As well as anything else we buy. Does anyone else do this? I have thought about putting most of it into savings at the beginning of the month, but then I worry I will not have enough and will get into trouble with the amount of transfers that we are allowed to have legally. Just looking for some ideas. Thanks!
Checking and Saving's Account Question
Yes, I do that, but I put a set amount into 2 savings accounts every month off the top. One is for short-term savings - car repairs, braces, stuff like that. In other words, the money is saved for expenses we know are coming up in 3 mos. to a year. The other is the "untouchable" savings - for a real, true emergency. Otherwise that money just sits there accumulating for long-term future use.
There is probably no point in putting your money into savings straight up. The interest rates are so ridiculously low right now that you would not be accumulating anything significant and might be getting yourself into trouble with too many transfers, as you said.
My checking is most active. When I get paid and deposit into checking, I am in a position to move money into different savings account (home maintenance, mortgage, ira investments, cash savings etc) off the top and then the rest is left in checking to cover bills that I intend to pay, and any other expenses for the month - food $$, fun $$, etc
When you get comfortable enough with your budget and finances, you may switch to (or start with a small amount, even if its 10.00 / pay) and "pay yourself first", which means put some cash up front, into savings. Make that part of your budget.
We transfer a set amount from each paycheck into savings that we use to cover bigger, less regular bill payments (insurance, winter gas bill, stuff like that). Anything we put into 'deeper savings' we do after letting it stay in our 'usable savings' in case it's needed. We've been able to anticipate needing cash from the savings and rarely end up needing to transfer money back more than once a month (so that's 3 transfers total, usually - the 2 into savings and one out.) Sometimes there could be 1-2 more, and I don't think we have restrictions on transfers that we even get close to.
Are you trying to put your money somewhere you're hoping to have make more money, or just keep more stashed out of use (this is our main goal with what we do)? I do agree with the pp's that you're unlikely to make money in a savings account. Not really sure how/if there's a good place to keep it if that's what you're hoping for.
Our income gets deposited into our chequing account. All of our bills, pre-authorized pymts (mortgage, RESP's, line of credit repayment, etc..) come out of this account. Each pay period I transfer a set amount into two different savings accounts (emergency fund and household improvement/vacation fund). At the end of the month I take any extra money and apply it to our line of credit debt. We are allowed unlimited transfers between our accounts so I don't worry about that. Transfers are also instant so if I make a mistake and need to transfer some money back it's no big deal.
That sounds familiar. My dh gets paid twice a month and after the bills are paid and we reserve some to get us through to the next check for gas, groceries, incidentals,etc. a portion gets transferred into savings. There is a minimum that I keep in there for emergencies/to avoid bank fees and some gets transferred back to checking to cover our mortgage when we get the next paycheck. May seem silly to some but it keeps us (mostly dh, really) from spending more than we need to. I also have my own checking acct which I put cash in from my part-time job waitressing and it is mostly used for healthcare bills and stuff the kids need (ie. braces, school dues, preschool fees, etc.)
I don't think this method makes us 'save' more. Bills are bills, and we still need to have willpower Not to spend or take money out. We also bank at a credit union so I have unlimited transfers and if I overdraw the checking, it just transfers from savings without a penalty.
I bank in a similar way. Our paychecks go into savings. After one paycheck, I'll transfer extra money into our savings account. After the second paycheck, I'll transfer extra into an additional student loan payment. I also have a small amount transferred from checking to savings automatically this month, but most months I do more than that.
Once enough builds up in savings, I put it into a CD, or sock it into retirement. My CD of choice right now is the No Penalty 11 month CD with Ally Bank. It has a decent interest rate (that's not saying much...it's still under 1%). After the first 6 days, I can withdraw money without a penalty, so if an emergency arises, I still have access to the money without fees. We'll probably keep our extra savings and retirement in that type of CD and mutual funds until interest rates go up again.