setting up sub-accounts for specific items?

[*MamaJen*]

How does that work? Say you want to have one fund where you save up for your next car, one fund where you set aside cash for home repairs, and so on. Do you literally set up sub-bank accounts, or do you just keep track in a budget while all the money sits in the same bank account?
I'm not into the envelope system, unless it's virtual. I'm a 21st century girl and do all my banking online. I make just about all my payments with a debit card because I can track where the money is going that way (unlike a lot of people, cash seems to float away for me, but the $12.91 for an unnecessary workday lunch is forever engraved on my online bank statement.) So anyway, I feel like it would be pretty easy to track line items, especially in savings accounts that aren't used on a daily basis.
What system works for you?

[kirstenb]

DH and I have four accounts between the two of us- two savings and two checking. If we are saving for a specific item, we will put money into one of our savings accounts. We bank online as well, and I can't have that money in our checking account as I would see it as money we could spend.

[barefootbabies]

I use ING Direct and have several savings accounts with them, for different things. I believe I currently have 6 different savings accounts with them - one for each of my boys, one each for DH and I (we used to each get a small amount of 'fun' money every week, unfortunately that is no longer in the budget, so the accounts are basically empty). Then I have one for just general savings, and one that has varied over the years. With ING you can change the nickname of the account, so I just change it as our situation changes. Last year we went to visit DH's family in Peru, so it became the "Peru" spending money account, then when I got pg it became the "Homebirth" savings account, etc. Anyway, ING lets you set up automatic savings plans, so you can have money put in on a regular basis, and I like that it is not immediately available so you have to really need it to bother taking it out. I could never just have it all sitting in one account, and tell myself the money was for X, I just know we would end up spending it.

[laohaire]

We use the same savings account and just assign the money into various "buckets." You can buy a budget program or you could just use Excel, Word, or even Notepad if you wanted to be simple about it.

Some of our "buckets" are:
- Heating oil
- Car insurance (we save a few bucks by paying annually instead of monthly, but we set aside a bit from every paycheck so it's never a "hit")
- Taxes (we have the minimum taken out of our taxes and send the IRS what we owe come April. So we never have to wait for refunds, and we make interest on it in the meantime)
- Short term savings (a fund for car repairs, basic medical expenses, or even saving up for a goodie like a dishwasher or whatever)
- Long term savings (to never be touched except in emergency)
- Gifts (Christmas, birthdays and so on - we save a bit from every paycheck)

And others. So when we deposit a paycheck, we allocate a certain amount to each bucket. And if we withdraw, we'll update the buckets accordingly.

[oneKnight]

Right now we have a savings checking account that we do not order checks for, and a regular joint checking account that has checks and debit cards connected to it. If we want to dig out of the savings fund I either transfer the $$ to the regular account online or drive to the bank to get cash - that way it doesn't get frittered away on fast food via the debit card.

I am thinking about setting up the auto withdraw for the mortgage to come out of the savings account (and of course adding the $$ every month), because sometimes it's easy to forget that is an outstanding debit when you are checking the balance.

[holidaymama]

We use an excel spreadsheet as well. It is pretty beneficial because say there is 5000 in savings, I have it spread out so I know that so much is to pay our HOA and there is money for a car, christmas, emergency, extra medical, car funds

It's kind of a pain in the butt, but it works for us!

[Eliseatthebeach]

I also use ING and have a number of different accounts in it.
One for each of the children, one for christmas, one for home, one for seasonal expenses, one for savings, and one for emergency expenses. Most of them have a direct deposit from my bank set up for each month. It is incredible easy to open and manage. I have been using it for about 9 years now and I am very happy with it.

[msjd123]

This should help: http://www.getrichslowly.org/blog/20...at-ing-direct/

This, too: http://www.getrichslowly.org/blog/20...thly-expenses/

[kanga1622]

Originally Posted by barefootbabies

I use ING Direct and have several savings accounts with them, for different things. I believe I currently have 6 different savings accounts with them {SNIP} With ING you can change the nickname of the account, so I just change it as our situation changes.

:

We have:

1. General Savings
2. Baby Savings
3. House Savings (for repairs or updates)
4. Car Savings (for repairs, insurance, and savings for a future car purchase)
5. Vacation Savings
6. Tax Savings (self-employment tax payments)

This way I can see exactly what I have for each account and know when we've got enough set aside for any given item. Plus, ING is so easy to transfer between the accounts so when I've met my goals in one account, I can easily transfer the extra interest or direct deposit amount to another account.

[Sarah8Jane]

Aren't there software programs that can help you track category expenses? Envelopes or something. I also thought WASABE was going to start something like that soon...

We have one checking account and one savings account.

Our pay goes into our checking account and I transfer $$ to one savings account. I use Excel to track our savings sub category balances. Our sub categories are: travel, tithing, taxes, insurance, car licensing, car replacement, home downpayment, 3-6 month emergency fund, overtime pay.

For day to day expenses, I keep an Excel running total projection of the checking account for the next 6 weeks (very general: pay day, rent, living expenses for the month, savings withdrawl, irregular bills like renters insurance, etc.) and update it every two weeks. We've done it long enough so that at month end I just break everything down from the online checking account statement and come up with what we spent in each category (very specific: food, car maintenance, fuel, utilities, clothing, food storage, gifts, hobbies, etc). If you're just starting with a budget you may want to try to do a running total for each specific category instead of calclulating it at the end.

I too cannot keep track of cash. Everything must come out of the checking account or I won't remember it. Usually, DH gets $20 per month for both of us, and he handles all cash transactions (thrift shops, yard sales, small purchases, etc.). I could tighten things up, but this seems to work well for us.

[llamalluv]

Excel.

[LittleBirdy]

Another ING user here, I give it a thumbs up! Setting up a new account is really easy (once you have your first account established). It literally takes a minute and a half. I also have my checking account with them and it works very well for me.

Right now I have 4 savings accounts - one general savings, one for bills (I get paid weekly and all my bills hit at the beginning of the month, so this is just easier), one for soap (we buy a year's supply of all household soap - from laundry detergent to bar soap - at a time, so I stick a few bucks in this account every week for that), one for general savings and one that is labelled DO NOT TOUCH. This is my "freedom fund" - money I am putting aside in order to move back to my hometown.

[OceansEve]

DH set up 6 different accounts when he was in charge of the finances.... I.... HATE.... IT!!!! I would much rather have one checking, one savings.. done. Just keep track of where the money in the savings account belongs.

[*MamaJen*]

So tell me about this ING?

[umarider]

We use a Money Market acct that is separate from other savings/checking accts as our "Freedom Acct.". Each payday $$ is automatically shifted over into that acct. I maintain a notebook that is divided up into sections for various predicted expenses which range from car repairs to travel, kids activities to buying a horse (someday!). I basically figured-out how much I would need annually for each category, divided that amt by 24 paydays and the total of those amts(rounded-up a little) is how much gets deposited.

Each payday I write in the deposited amount for each category. I know I could do this more simply using Quicken or some other program, but something about the tactile aspect of the notebook helps keep me going w/ the savings program. That notebook is my "precious" (said in a very "Gollum" kinda way!)

[kanga1622]

ING is a totally online bank. Most people seem to use them for their savings accounts because they pay a much higher interest rate than any local bank I've found. Right now they are paying 2.96% interest.

They also offer checking accounts, CDs, mortgages, and some investment stuff they e-mail me every so often.

[Ghislaine]

My credit union has my checking and savings etc. all under one account number with a suffix to differentiate each one. They would take my direct deposit and split it up amongst the accounts as I requested. So I use it as follows:


0 - Savings - Mortgage, Monthly Bills
4 - Checking - Gas, Groceries, Spending/Allowance
9 - Savings - Hobby
12 - Savings - Annual/Semi Annual bills like Insurance and Property Tax

I also have ING accounts for longer term savings:
Emergency Fund
Car Savings
Condo Expenses

This is what worked really well for me. ING is all online pretty much so you'll be doing ACH transfers from your checking account into the ING. You can also set up auto transfers for automated savings.

Another neat thing about ING is referral bonuses. You could probably PM anyone who's mentioned having an ING account with your e-mail address to get a referral e-mail which will net you a $25 deposit if you make an initial $250 deposit. The person who initiates the e-mail will get $10.

[slsurface]

Like the last poster, DH and I have a number of sub accounts under one account number at the credit union. We have savings, checking, money market account, and two special accounts to save for school and home repairs. In the past, I have had up to 6 different special savings accounts (I even kept savings for Christmas and birthdays separate in the past). I have also had some CDs under the same account number too.

I find it useful to keep the money under different sub accounts because it is easier to keep track of my saving and spending for various things. Just be aware that some banks and credit unions will not pay interest on all sub accounts.

[~Nikki~]

Weeeiiiird. I was just thinking about this last night, and what a good idea it would be for banks to implement this sort of thing. I had no idea it already existed! I'm 99.9% sure that my bank doesn't offer this feature (it's the type of bank where we have to keep $1000 in our savings account or we're charged a fee....so I wouldn't want to open mini-accounts with them, anyway).

I'll have to look more into ING for our savings account. We have issues with designating money in our Excel spreadsheet. It looks all fine and dandy there, but when the money is in one big bank account, it's not "protected" for those intended purposes. It's too easy to accidentally spend it on other things. At least in our experience. =P

[AuntNi]

MamaJen, here's how we do it:

We have our Contingency Fund in ING's Orange Savings account. It's a (growing) chunk of money that I eventually want to equal 8 months' income. It's for true emergencies like job loss.

We have our Freedom Account in ING's Electric Orange checking account. It's for stuff like home repairs, car repairs, Christmas, car insurance, and vacation. It has a debit card, which is soooo handy. I separate all the sub-accounts in an Excel sheet.

The reason I use the checking account is this: with ANY savings acount, you're limited to how many withdrawals you can make in a month. So my Christmas sub-account sits there all year, but in November and December, I use my debit card a LOT of times. Or if the whole family comes down with a bug, I have to pay three different doctors, and visit Walgreens several times for prescriptions. I couldn't do this with a savings account.

But it's really personal preference. The important thing is you're planning ahead for these expenses, and that is totally great! :