13 Bank accounts?!

[GoodSteward]

So I was youtube surfing and came across this couple who make financial videos. The wife apparently has a degree in finance according to their site.

I located a video they had about why they use 13 bank accounts. I only watched 1/3 of the video but figured out pretty quick they are basically treating the bank accounts as categories. They have one account the direct deposits go into, and then they put money into other accounts such as eating out, non-monthly bills like taxes, etc.

I'll make a couple assumptions, but could be wrong. They do this to 1# not have to keep track of everything, like eating out, and #2 lack some self-control needed to go to this extreme to make sure money is saved up for things when they come up. I mean, as long as it works they are winning with money. But wow... Here is why I assume this. The man made the comment they can just see what is left in the eating out fund, and when the account is low know they need to be careful. That must mean they just read the bank account balance rather than budget and account the purchases, which is concerning. The other statement made was they had a problem coming up with the money needed for non-monthly bills like taxes, so this enabled them to save for those. This also means you have 13 debit cards on you. It just seems way too over complicated, BUT....whatever it takes to win with money is better than failing if you can't do it the normal way.

I have two incomes, one ministry and one non-ministry. For a while I had two checking, and two savings thinking I needed to keep these separate since one is self-employed and the other isn't. One savings account was for self-employment taxes, and the other was for personal savings like an eFund. However, it didn't end up being very much help, and really just overcomplicated it. I didn't need the saved taxes like I thought since I have so many write offs. I was using a ledger book I created to do categories, which I then converted to a spreadsheet workbook with all these formulas. I have tried mint.com, but there were too many issues I found with it. Finally, I found YNAB(You need a budget), and it is great. It's what I now use, and I combined both checking and savings. It is so much easier for me to do the opposite of what they do. One bank account with many categories in the budgeting software.

I don't mean to criticize them, and hey..they are doing good apparently. There are just some red flags thrown up when I hear why they went to doing this is all. Maybe I'm in the dark, and this is the "in thang" with you guru peoeples. How many accounts do you have?

[disneysteve]

Some banks allow you to set up sub-accounts which accomplishes essentially the same thing but all within one account. That's certainly a lot easier.

A plain old spreadsheet would work, too.

And then there are the folks who do a cash envelope system a la Dave Ramsey which honestly seems a whole lot easier to me than having 13 bank accounts.

[Eagle]

many accounts do you have?

We have 10 savings accounts for our sinking funds. Perhaps what you were seeing was how they set up their sinking funds? What's the link to the video?

A sinking fund can be described as a fund formed by periodically setting aside money for the gradual repayment of a debt, expected bill, potential purchase, or replacement of a depreciating asset.

Ours include car insurance, car maintenance, healthcare deductibles, purchases, home upkeep, etc.

We did the cash envelope system for 5-6 months and really didn't like it. Having to keep up with all those receipts was a hassle. We like using www.mint.com and a spreadsheet to help us stay on budget.

[Joan.of.the.Arch]

We have four. One was set up in order to get either a good opening bonus and decent interest back in the day when that was actually a thing. It's online and was helpful when we wanted to send our son some money directly into his account. That was very convenient, safe, fast, and free so we keep that account as a way to quickly send money. One account is at a credit union. It was set up for the 6% interest offered even after the Great Recession when most banks were offering close to 0.1%. We used that as to receive the monthly paycheck, then kept it open to pay the health insurance monthly. The other two accounts are at state chartered banks. They were opened for high interest and continue to pay up to 4% on $10,000 if we use debit cards a sufficient number of times per month. Without out the good interest and online money-sending ability on the first, we'd just collapse it all into the credit union.

[Nutria]

I looked at YNAB, but have too much invested in my own "forward-looking check register is the budget" system. I did like their idea of separating categories from bank accounts, though. So now I have a Savings spreadsheet with 22 category columns (everything from ~$50 bi-monthly sewerage to multi-thousand semi-annual auto insurance and annual income and prop tax and sub-$200 SiriusXM annual renewal).

This is physically stored in Primary, Secondary and Tertiary Savings. (Tertiary is really a set of 12 month CDs, with one renewing every 2 months.)

All "irregular" spending happens from the Primary Savings account.

"Monthly savings" is transferred from Checking to Primary Savings at EOM. At BOM, and variable sized chunk is transferred between Primary and Secondary. Usually it goes from Primary to Secondary, but if a big expense (auto insurance, or tuition, for example) will happen that month, then money flows from Secondary to Primary.

When the balance in the Secondary Savings account gets too high, I roll some into another 12 month CD.

The bank sees Primary Savings as a checking account, since that's what it is.

So, I've got:

1. Checking
2. Primary Savings
3. Secondary Savings
4. Tertiary Savings (multiple CDs)

[GoodSteward]

I didn't watch the whole thing, but the way they described it they were using them to spend out of. Like I said the first thing they mentioned after their main checking was an account to go out to eat on monthly.

https://www.youtube.com/watch?v=YrlAnqcCzJA

Mint is a great tool for many, especially being free. I think it looks purdy too. However, in trying to make my life easier it ended up being too complicated. It wants to auto pull transactions from your bank. It sounds awesome, but I found trust issues after trying it. The main problem I faced with this was with manual transactions like checks. I would enter a check in to keep up with the real balance, but when it would auto pull from my bank a lot of times it wouldn't match the check up when it cleared creating two entries for the same thing and reflect the wrong balance. I also noticed it didn't always match up debit transactions if I entered them manually. When I would reconcile I would have to figure out what was going on. I couldn't trust the software, and it got me into a mess before I finally stopped using it.

I fully believe the only way to accurately keep up with your money is to manually enter things in, and manually reconcile. All this auto import, auto-categorize stuff can disconnect you from your money, and also leave room for issues. If you have to go back and verify it all what is the point of it to start with? When you manually enter in the receipts you can see the purchases over and over. More than once I had a "come to Jesus" meeting with my wife about needing to change our spending habits after entering in so many at one time after waiting a week. I personally think it helps keep things in perspective. To each their own.

[DaveInPgh]

My wife has a checking account that dates back to before we were married. I have one as well but switched banks when the bank I was using changed their "FREE" requirements. We also have a savings account that is viewed as our Emergency Fund.

I have considered opening several accounts to cash in on the bonus money all of the banks want to give out. However, figured it would be a PITA making sure all of the criteria was met to avoid fees.

[Nutria]

We have 10 savings accounts for our sinking funds.

Our bank has a minimum no-fee balance requirement of $300, so separate accounts are impractical. Reading about YNAB triggered me to use a spreadsheet and handful of bank accounts instead.

The benefit of spreadsheets is that you can play them forwards many months in advance, adding in known monthly deposits and regular (auto insurance) and irregular (vacation) withdrawals.

[GoodSteward]

The benefit of spreadsheets is that you can play them forwards many months in advance, adding in known monthly deposits and regular (auto insurance) and irregular (vacation) withdrawals.

YNABers would crucify you for doing that, too. Their whole philosophy is against forecasting. They want you to only worry about the money you have right now, not work on funding your categories to match your monthly budget(Like Mint encourages). They do believe in planning, but not forecasting. For the longest time I couldn't understand how they are separate, and even still I assume the only difference is how far ahead you look. I think it is impossible to budget and not look at least month to month, which they tell you to sit down and plan out each month with your spouse so I assume that is what they mean. I guess the difference might be forecasting means you are spending based on what you plan to make, whereas planning is only spending based on what you have on hand in categories? I personally don't see any harm in making long-term goals based on assumed income which requires at least a level of forecasting, but also understanding it could change as life isn't guaranteed to stay the course every month. I believe their intentions, based on the reading I've done as to why they are against forecasting, is to avoid the behavior problems that come along with "failing" on your budget. Your money doesn't end up like you planned, therefore, you suck, this isn't working, and you just quit.

To the point, YNAB is avidly against forecasting. Check out their blog and forums. lol

[Nutria]

Mint is a great tool for many, especially being free. I think it looks purdy too. However, in trying to make my life easier it ended up being too complicated. It wants to auto pull transactions from your bank. It sounds awesome, but I found trust issues after trying it. The main problem I faced with this was with manual transactions like checks. I would enter a check in to keep up with the real balance, but when it would auto pull from my bank a lot of times it wouldn't match the check up when it cleared creating two entries for the same thing and reflect the wrong balance. I also noticed it didn't always match up debit transactions if I entered them manually. When I would reconcile I would have to figure out what was going on. I couldn't trust the software, and it got me into a mess before I finally stopped using it.

I fully believe the only way to accurately keep up with your money is to manually enter things in, and manually reconcile. All this auto import, auto-categorize stuff can disconnect you from your money, and also leave room for issues. If you have to go back and verify it all what is the point of it to start with? When you manually enter in the receipts you can see the purchases over and over.

This is why I like a check register spreadsheet. It's simple enough to be workable while flexible enough to also be a budget tool.

I should mention that the check register spreadsheet also has "CC register" tabs for our two actively used card. They link back to the check register so that all CC spending is instantly reflected in the EOM checking account balance.

More than once I had a "come to Jesus" meeting with my wife about needing to change our spending habits after entering in so many at one time after waiting a week. I personally think it helps keep things in perspective. To each their own.

That's why we rarely use checks anymore. Cards (debit and credit) automatically show up online with a minimum of delay.

[Nutria]

YNABers would crucify you for doing that, too. Their whole philosophy is against forecasting. They want you to only worry about the money you have right now, not work on funding your categories to match your monthly budget(Like Mint encourages). They do believe in planning, but not forecasting. For the longest time I couldn't understand how they are separate, and even still I assume the only difference is how far ahead you look. I think it is impossible to budget and not look at least month to month, which they tell you to sit down and plan out each month with your spouse so I assume that is what they mean. I guess the difference might be forecasting means you are spending based on what you plan to make, whereas planning is only spending based on what you have on hand in categories? I personally don't see any harm in making long-term goals based on assumed income which requires at least a level of forecasting,

I'm a salaried employee. My wife is hourly, but works a definite minimum every week (paid sick leave and vacation), so unless one of us is fired, we know what our baseline income will be in October...

but also understanding it could change as life isn't guaranteed to stay the course every month. I believe their intentions, based on the reading I've done as to why they are against forecasting, is to avoid the behavior problems that come along with "failing" on your budget. Your money doesn't end up like you planned, therefore, you suck, this isn't working, and you just quit.

To the point, YNAB is avidly against forecasting. Check out their blog and forums. lol

Then I agree with YNAB, since I forecast spending, not possibly increased earnings.

My wife is supposed to get a raise in August, and supposed to get a bigger Christmas bonus this year, since she has a higher job title and more pay. However, I'm not counting those chickens until they hatch.

[GoodSteward]

That's why we rarely use checks anymore. Cards (debit and credit) automatically show up online with a minimum of delay.

This actually is while using debit cards. I pretty much only use checks for tax write offs like charity. Also, Gas and sit down dining where tips are left leave room for error as most do not accurately reflect the proper amount until they post. Until then they are pending for less than they actually are.

I used my spreadsheet for a long time but found it much simpler to use YNAb as I have an app to enter in the receipts right away easily on the go. I could do the same with my spreadsheet since I had it on my google drive, but it was a pain sliding around the spreadsheet on a little screen, entering each cell...blah.

Either way, I'm glad it works for you! I feel that's the most important part of budgeting...whether or not it works.

As a side note, I used to feel my way was the best(each time I changed! , and you should do it my way. However, the best way is simply the one that you will follow. Even if it isn't the best overall.

[Nutria]

As a side note, I used to feel my way was the best(each time I changed! , and you should do it my way. However, the best way is simply the one that you will follow. Even if it isn't the best overall.

True. I have no doubt that YNAB better than my spreadsheets (which have limitations like not being conducive to graphing trends), but I've got a lot of "mental capital" invested in this system, grok it and think that it's Good Enough for our purposes.

[parafly]

A large number of bank accounts just seems like way too much overhead.

My wife and I have three joint bank accounts. One checking, one savings, and one "high yield" online savings. The checking account is used as an income staging area (monthly zero sum budget), the savings account is used as our short term EF, and the online savings account is used for the remainder of our EF as well as big ticket savings goals.

For the vast majority of people, this should be perfectly adequate. Why open a dozen bank accounts to categorize savings when a couple bank accounts and a simple spreadsheet works just as well and requires a fraction of the financial management?

[GoodSteward]

Why open a dozen bank accounts to categorize savings when a couple bank accounts and a simple spreadsheet works just as well and requires a fraction of the financial management?

After discussing this with someone in the office, I suppose there is a benefit to the idea of forcing you to stop spending by there being a mandatory cut off or risk an overdraft. However, as I said before that seems more like a discipline issue rather than a best practice.