How to Save Money: The Multi-Bank Account Method

how to save money using the multi bank account method

The multi-bank account method was first suggested to me about five and a half years ago when I went into my high street back to sort out my overdraft. I sat down with an advisor who could tell from the way I managed my money that was I wasn’t very good with it.  I can honestly say it’s one of the best things I’ve ever done for my finances. The multi-bank account method is sometimes referred to as the ‘Jam-Jar’ method as it is alike to withdrawing all your cash and popping it in different labelled jam jars and in this post I’m going to tell you how to save money using this method.

I operate with a fair few bank accounts (you don’t need this many and can work with less) and I use each one for a different reason.  Below I’m going to explain why I have seven accounts and how it’s helped me manage my money and how to save money with them.

How to save money: The Multi-Bank Account Method

Like with every financial decision, it really is best to seek professional help if you’re going to make big changes with your money and bank accounts. If you think this could work for you, I’d have a chat with somebody who can help. Opening multiple bank accounts in a short space of time can affect your credit rating so please don’t ignore me when I say to get advice from a professional!

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So onto the bank accounts and how to save money using them…

Bank account One: The Salary Account

I have my salary paid into this account. This account is a high street bank where I use to pay an account fee for extras – not any more as they were a rip off! All this account is used for, is to pay in my salary and money then moves from this account to various others.

Bank Account Two: The Bill Account

The day after payday, I have a standing order set up to transfer a set amount each month into my bill account.  This means that I’m never short to pay my bills as they’re covered pretty much at the beginning of the month.  The money for them stays in a separate account and all the direct debits come from that one.  I don’t have a debit card for this account and I’m never ever tempted to transfer money back out of it.  Every 6 months, I reassess the amount that needs to be paid into my bill account. I add up all my outgoing and change the number accordingly.  If the amount has gone down, I take the difference and split it in half. With one half I increase the amount into my savings account each month and I pay the other half into my everyday spending money (because life isn’t all about savings!)

Bank Account Three: The Everyday Savings Account (Emergency fund)

Having a savings account is fairly self-explanatory.  I transfer a set amount of my salary into my savings the day after payday.  I really had to train myself into the mindset that transferring money into my savings is just another bill and it’s taken from my account before I can spend the rest of my money.  At first, I use to bounce the money to my bill account and then to my savings (treating it as a bill) but now it goes straight from bank account one to here.

How to save money

Bank Account Four: The Everyday Spending Account

I use an online bank to transfer the remainder of my money in to on a weekly basis. I divide my money by five each month and transfer that money over on a Friday! (Dividing your money by five means you’re never caught short on a five-week month!)  I like Monzo or Starling as they show you exactly what you’re spending your money on each month and allows you to keep track of your spending via an app so you can see clearly where you can make extra savings.  It’s also great when you go abroad as you don’t have to pay exchange rates when you use the card.  Any apps that require payment are linked to this account including my Uber, PayPal and Deliveroo to name but a few.

Bank Account Five: The Travel Card Account

This one is certainly not going to apply for everybody but I keep my travel money separate from my other accounts.  Each week I transfer money onto this contactless card to get around London. As I have a railcard, this money is then used to auto-top up my oyster. Any money left over at the end of the week is then transferred into my savings.

Bank Account Six, Seven and Eight: The Business Account

Bank accounts Six, Seven and Eight are my more long term savings accounts. ISA’S etc. Once my emergency fund account reaches a number I’m comfortable with (minimum of two months salary), I divert my savings to one of three accounts to help with my longer term financial goals.

As my financial situation changes, I’ll probably open more accounts to manage it – if we ever wanted a joint savings account for example or an ‘emergency house fund’ account for when we buy a house and something goes wrong.

My bank advised me that it wouldn’t hurt my credit rating having so many accounts but I’ve heard that opening up lots of new accounts in quick succession can be damaging to your credit rating. This is why you need to speak to a professional before embarking on this method,

It did take me a while to get my head around the multi-bank account method and how it can help you save money, and my best piece of advice is where possible, don’t take from any of the bank accounts to fund your everyday life or you’ll end up in a vicious circle of replacing funds all over the place.  Once the money is gone, it’s gone!  Don’t forget your twice-yearly checks to make sure the right amount of money is going into each pot.

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