Can I have two current accounts, one for bills and one for spending?

[ShitWithMoney]

Hi Everyone

Name change for this. Name states the obvious.

I've read some threads on here about couples having a joint account to put all the money needed to pay the bills, then keeping a personal account for their own spending.

This is what I need, only it's just me, and I need two current accounts really. The one I have where the bills are paid from, and one where I can transfer my spending money to.

I am in dire need of separating the two. Do any of you know how I could do this? Or if not, are there any ways to separate the money?

I have 6 accounts, I have no debts

1. all income goes in and all direct debits for bills etc go out once I get paid I leave a set amount in to cover food and transport costs, dinner money pocket money and all the rest is moved to one of my other 5 accounts my credit card is paid from this account
2. a sinking fund account this covers the rest of the normal expenses I have a yearly budget and transfer 1/12 into it each month ( minus what I know will be required ie if I know next month I have my MOT due and two birthdays this money will be kept in account 1) This will include house insurance car insurance servicing MOT ( an allowance for regualr stuff like tyres and brake pads) a set amount for Christmas and birthday presents a set amount for house garden maintenance and small purchases like new kettle bedding light bulbs etc we run our heating on oil so there is an amount for that as generally only refilled every 6-8 months an amount for DD's clothes uniform etc) any money spent from sinking fund will be sent to account 1 so the credit card bill will always be paid in full
3. short term savings for holidays and in my case a new fridge freezer and for some roof repairs when needed would be paid for with credit card and amount transferred to account 1
4. my personal spending money for clothes entertainment eating out this account has a debit card I allow myself and DH the same amount each month any bonus money from selling stuff on ebay or getting money for birthdays etc gets added here
5. 6 months bare bones expenses as savings (as I'm self employed I also keep the money I have set aside for tax etc in this account) also a set sum so we can buy next car for cash basically apart from tax no money should generally be leaving this account at present this account doesn't need to be added to apart from tax
6. long term savings most not to be touched before I retire some will support DD if she goes to uni or similar

I decide when I get paid how much is going into each account so I pay myself into my personal savings, sinking funds and long term savings immediately. By paying into savings immediately savings build faster as although technically I can move money easily back to account 1. it is harder psychologically to remove money from savings to current account than it is to wait until end of month and just move what is left in account 1 to savings

Having a set budget for certain items helps build savings as it is an internal discussion do I want to reduce my savings in order to spend more in the supermarket .... the answer is very rarely yes

I love Starling for this. You can have pots and you can set DDs to come from certain pots - so I have a home bills pot, and all the home bills come out of that pot without me having to move money around, other than putting in a set amount each month. You can also have virtual cards for your pots, so I have one for home bills for stuff that isn't on direct debit. And another one for my Groceries pot which I use for all food bills.

@Cottagecheeseisnotcheese

How do you budget for the car? For instance, say you had £20K saved so far and that was your budget. And your current car was written off or died, so you bought a new one.... How wouuld you then ensure you had enough for your next car, bearing in mind you don't know how long the freshly bought one would last?

Would it be a case of transferring £20K from other savings to car savings, so it's done, then build up other savings after that?

Yes I have a few. And a few saving accounts. I find it easier for saving and spending.

I'm with First Direct & I have 3 accounts. My main account that my salary goes into & I use day to day. On pay day I have a direct debit set to transfer an amount to my savings account & a set amount to my bills account.

It's definitely the easiest way to do it

I assume you must have quite a high income if you can afford to buy a car that expensive outright so saving for a new one won't be an issue

Just divide the amount you want to spend by the number on months you think the cat will last and save that amount

It's unlikely that any car will be worth £0 when you come to change it so you can take some off the total for that

That's a very simple example but you can work your own way out that suits you best

@ShitWithMoney if it was an accident I would hope insurance would cover it but basically when i get a car I decide I will keep this for 3-4 years and i will get approx £X as trade in and I'll need to add another £6000 so if i need £6000 in 3 years I need to save £166 a month so it is earning interest, this has worked for me for past 30 years, I only borrowed money for my first car as needed one for my first job out of uni I never buy brand new cars normally ones about 3-5 years old and then look after them. Fortunately DH is good with cars and keeps a good eye on them , keeping everything maintained and oiled greased etc. I have never had a car die, his car has 200,000 miles as is still good. So yes as soon as i get a new car i will be budgetting for it's eventual replacement. I have never spent more than 10K on a car ever

most things people count as emergencies with cars are foreseeable events needing new tyres brake pads etc after 10-20,000 miles is a foreseeable event replacing brand new tyres 6 weeks later as there were nails on the road is an emergency

unfortunately many things are not made to last anymore; so when you get a new washing machine you sort of know you will need another in 5 years 7 if you are lucky

I’ve got 5 current accounts.
Two are the sort that need a certain amount paying in, the other 3 don’t.

I use one for my bills, one for house bills, one for my horse bills, one for my BTL and the other one is the one I don’t really use but tart about to get all the various cash for new account offers.

Just don’t open them all at once and don’t put overdrafts on them all.

God no, I don't have a high income, nor do I have £20K hanging around! I just didn't want to insult @Cottagecheeseisnotcheese with a £5k car if she was doing well for herself, that's all... 😆

My question was more about what if whatever amount you've paid for a car would take years and years to replenish in the "car savings" pot. What happens if the car you've just bought only lasts two years.

What's the best strategy?

Why would the car only last two years?

If some extreme circumstance happened you'd do what most people do and either get a contract car or a loan from the bank

I don't know the stats but I'd guess that buying cars outright isn't the norm nowadays. This was a topic of conversation at work recently and most of the staff use monthly contracts for cars

Thanks @Cottagecheeseisnotcheese - I paid £6k for my current car and it was a great deal as it had hardly any mileage. It's now gone over 100,000 miles, and the last service and fixing of various things was quite pricey, so I'm aware I need to be better prepared.

Thanks for sharing what you do, it's really helpful.

I have a salary and direct debits account (HSBC), a joint household account (nationwide) and a spending account (starling)

HSBC is great as it show balance after bills which is always £0 I never touch it other than for DD and to transfer funds.

After payday into HSBC money feeds the piggies - "life savings" household (bills food dog kids) and spending allowance. anything leftover in HSBC (ie above £0 on balance after bill) is put in a space in starling called general savings. I use this bigger purchases such as holidays, laptop or new phone, car insurance etc. some of these I have set up as spaces in Starling - I have a Xmas space and a gift space for example.

It's fun good luck and enjoy getting organised.

I recommend saving £1000 in an emergency fund before anything else

I think you have to look at averages not worse case scenario to start with; very few cars unless already 10+ years old would only last 2 years, many people for their first car will need finance as they can't save enough before they need it but my philosophy in that case would be what is the most economical option ( not cheapest) what is the spec you really need as opposed to want don't buy a car for your annual camping trip it is better to buy small car and hire an estate for 2 weeks in the summer than to be driving an estate around with 1 person and 4 bags of supermarket sjhopping the other 50 weeks, if however you always need to have a pushchair sports equipment etc then an old reliable estate car might be best

Just don’t open them all at once

I've just opened a Monzo one so I can at least have my original current account as the bills account, and transfer spending money so I've a better idea about what's happening. I'll sort out any others in a few weeks.

Does anyone remember Microsoft Money? I used to use that then when they discontinued, kept it on an old netbook for years until that died. It's only since then I've got into this pickle of not knowing what's happening with my money.

I'm also self employed and Covid wiped out my savings as I couldn't do any work, which I've not managed to sort out and replenish as it's taken ages to restart my business.

If you're opening new current accounts a few offer you a cash incentive....

@ShitWithMoney if you know the garage well ask them if there is any other big things coming up if you drive through lots of water ( not just average rain) then rust underneath is maybe going to be a problem so you need to start saving for another one any car with a valid MOT is going to be worth £1500 even if it has done 300, 000 miles so if you think in a year or so it will need replacing start saving now it isalways going to be better for you to buy a 8000 car with 4000 savings and 4000 finance ( or whatever the split is) than 8000 finance

I have several accounts with one bank, it's really easy then to switch money between different accounts and it's there immediately.

@ShitWithMoney covid wiped a lot of self employed people's savings and it takes time to build them back up as welll as allowing for needing to fund your own sick and annual leave

try looking up zero balance budgetting

I've just had a quick look at that, and it seems similar to what I was doing with Microsoft Money back in the day. Thanks.

I have two current accounts and 3 card cash accounts. Halifax don't seem to mind! Works v well for organising money

You can also open savings accounts, so holidays and car accounts can earn some interest. We have lots of savings accounts and a mix of 1 years fixed and instant access. You can reach the point of having ISA’s in a couple of years, to maximise interest

Thanks everyone who has posted - lots of ideas and things to think about. I really appreciate your help.

Now I've opened a Monzo account, it's given me a bit of breathing space as I at least will know that is a spending account and my other is bills only.

I'm going to start with a clean slate in January and this has all helped me think about how to help myself!

Yes, in fact at one point I used to have four. One for spending money, one for household bills, one for petrol and car costs, one for holidays and Christmas.

When I got paid I had standing orders for set amounts to each one. It meant that things like car insurance, car tax, Christmas shopping and holiday money were spread through the year and I never risked spending the money I needed for the electric bill!

Now lots of banks let you have pockets to separate money out too which helps.

You can create lots of pots in the Monzo account and there’s loads of settings you can use to manage the pots as if they are separate accounts. Might be all you need.

I have my horse bills account with Monzo and have various pots for vets bills, farrier, livery etc. works very well.

If it helps my theory is to remove all allocated money from my spending account the day I get paid. Most is direct debit but like others I separate money to pay for things like car, kids activities, pet bills etc etc as I've averaged the yearly cost a and divined it by months. I also slightly overpay these accounts so for example I pay into an activities account for dds dance lessons but if some ballet shoes break I know there's likely excess in that account to buy them and it doesn't cause a budget bulge that month. Once you have done this for a year you are ahead with all your money and it's so easy after that.

You get to a point where you you can spend guilt free on treats because it's nothing to do with bills etc.