For a long time I was a believer in a single, well-checked bank account. I realised now that I’d never checked most of my spending. I had a rough idea how much it was because I noticed whenever I took out £100 or so from the bank and how long it had been since I last withdrew cash. At any instant I could see how much cash I’d spent by how much was left in my wallet. But I never checked small amounts like the 49p for cable clips, or the £1.50 for a pasty, because I never checked individual receipts for cash payments.
I always had a rough idea how much cash I spent which I checked by matching 4 or 5 cash withdrawal slips with the bank statement, at the same time checking the dozen or so big items which were not cash, and my total cash spending from the cash withdrawal
Then the world changed as the number of card payments from my ‘single, well-checked bank account’ steadily rose. Come bank statement checking time, I found it was a nightmare with so many bits of paper. The big items were being disguised by a large number of small items, like 49p for some cable clips or £1.50 for a pasty. Bank account checking, which had been easy, became difficult. That coincided with a suggestion from a family member that multiple bank accounts were worth considering and eventually I was converted. I now have four main bank accounts:
All my income goes into my Income account. From that account there are three standing orders to my other three accounts. It takes seconds to check my Income account statement because just my income goes in and three standing orders come out.
I have a Bills spreadsheet (Google docs) which lists all my regular bills, including estimated amounts for things that I know will happen. It’s something like this:
The spreadsheet tells me that my regular bills are something around £650 a month and there is a standing order from my Income account to my Bills account of £700 a month. It’s easy to check my Bills account because there is the single income from my Income account and a number of payments, all of which I am expecting and included on the spreadsheet. As the years go on, I add more and more things to the Bills spreadsheet which gradually gets clearer as a predictor of the regular outgoings.
There is a standing order from my Income account straight into my Savings account, of an amount I have decided to save every month. (In fact there is another standing order into the Savings account of £150, the car replacement cost and the family holiday cost. Those amounts, too, accumulate in my savings account and, come new car time and holiday time, those bills are paid from my savings account.) Checking my savings account is easy. There are the two standing orders, one from Income and one from Bills, and that’s it until I spend on holiday or car.
The third payment from my Income account is to the Day-to-day account. From that I pay food, car fuel, meals out, any hobby expenditure, paint for the house, furniture, books, magazines, Amazon expenditure, Ebay, optician charges…plus cable clips and pasties. In other words, all the other expenditure. My credit card comes out of this account as well. So all my expenditure is summarised by the Bills account or the Day-to-day account, through which all my expenditure is paid.
My day-to-day account is a Starling account, though Monzo is just as good. Starling is an electronic banking account that is very easy to use and check. It is my wallet and gets filled up by the standing order at the beginning of the month. At any stage of the month I can look at it and see how much I have spent and how much I have left.
Do I check the Day-to-day account? No I don’t. It’s like I used to treat my wallet. I only look at the totals. But it’s better than my wallet because I can look back at the expenditure over the month and instantly see the patterns in my expenditure. Starling provides me with monthly summaries categorising my expenditure as well as the detail if I want it.
The consequence of all the above is that I check Income, Bills and Saving monthly. But it only takes seconds, because they are so easy to check. I check Day-to-day quite often but briefly, seeing how long it is until the end of the month and how much I have left. As for the nightmare of monthly checking of my bank statements, that has gone completely. Life is so much easier and clearer.
Is this OCD? Possibly. But actually it is appropriate OCD. Appropriate OCD makes life easier, reducing the time doing things that one doesn’t want to do, leaving more time for the things that one does want to do.
For a while, bank accounts have been free. So, if a different type of expenditure arises, it’s been easy to have another account for that expenditure. Even where there is a charge (Starling charges £2 a month for extra accounts) it can be worth having additional accounts if you can’t get a free one from a different bank. House renovations: get a house renovation account. Pay for everything with a card from that account and instantly you can see how much has been spent on the whole project. If it’s easier, and to avoid confusion, it’s possible to have separate car and holiday accounts to keep them separate from general savings. Husband and wife ‘pocket money’, separate from general household expenditure, can also go in separate accounts.
Other forms of income – share dividends, self-employed work etc – can also each have their own account. That way, come tax return time, all the information is in one account.