I was looking over my bank account list the other day and realized that over the past 18 months, I have significantly increased the number of accounts I use. In early 2007, I had two basic accounts - savings and checking. Now, I have seven different accounts that I use every month. I have three savings accounts at ING Direct, an Electric Orange Checking account at ING Direct, a savings and checking account at my local brick and mortar bank, and a savings account with HSBC Direct.
Each of these accounts has a different purpose.
The ING Savings Accounts are each named according to their purpose: Long Term Savings, Short Term Savings, and Frivolity Fund.
Long Term Savings is fairly self explanatory. This is my main savings account. On the first day of every month, I have a set amount transferred into this account. Where does it transfer from?
That leads us to the Short Term Savings account. This is what I consider to be my spending money. A set amount of money from each paycheck is deposited into this account after every payday. This account is essentially my bill pay account as well, though because it is a savings account, it can't be used for online bill pay.
Which is why I have the Electric Orange account. When my credit card bills arrive, I transfer money from Short Term Savings into the Electric Orange account and then use that to pay the bills online.
The Frivolity Fund was created to try to spur me into action on my budget. Every month, I start the budget with a set amount of money budgeted as fun money - savings for a big purchase. However, to encourage myself to stay on budget, at the end of the month, if I'm over in any categories, the money comes out of the fun money budget category to cover. If there's still money in that category after covering my overages, then I transfer that amount from Short Term Savings into the Frivolity Fund. Watching it grow and earn interest really does encourage me to stay on budget.
The HSBC Direct account is used for my Dollar a Day plan. I chose to host the plan there mainly so I could have the opportunity to try out HSBC Direct's features. After using it for seven months, I have decided that I very much prefer ING's features and will be transferring all the funds from that account back to ING Direct at the end of the year, even though HSBC does have slightly higher rates. I'll sacrifice that for the preferred banking experience.
Every two weeks, my paycheck deposits into the checking account at my brick and mortar bank. For a while, I considered having it deposit to ING, but I like having instant access to the money, just in case. I keep enough in this account to cover my rent and monthly cash withdrawls. I keep a small reserve of money in the savings account "just in case."
It seems like a lot sometimes, but I know that there are many others out there who are juggling many more accounts. Most of the transfers I indicated above are automatic - the only transfers I ever initiate are those to pay the credit card bills and to the frivolity fund, plus the occasional transfer from brick and mortar checking to savings.
I hope to open another ING sub account later this year to start a "charity fund," rather than just keeping it as a budget category in YNAB, but beyond that, I'm happy with my current setup.