General Question

dumbteenth's avatar

Is it feasable to have 3 seperate bank accounts, and have money automatically transfered from one to another every few weeks?

Asked by dumbteenth (205 points ) August 19th, 2010

I just got out of college and have my first grown job, so I’m dealing with grown up money. I already have a savings account for emergencies and I don’t want to touch that, though I know it’s very common to have a savings account and spending account.

What I want to know is if it’s possible to have ANOTHER bank account in addition to my saving and spending accounts – one where my paychecks are directly deposited and I use it for paying rent/bills/etc…and then a spending account where a small amount of spending money (say, 200 or 300 bucks or so) is automatically transferred every two weeks for food, gas, entertainment (anything left over I put in savings)? I guess my question is, does this seem like a feasible idea? To have 3 accounts, a savings, spending, AND rent/bills account? Is it possible to have a set amount of money auto-transferred from one account to another incrementally over a set period of time? Or does this sound like a ridiculous idea? Know anyone who does it? Have you ever done it? Does your bank? I’d ask my bank, but I’m stuck at work and figured I could query the internet first.

Just asking because I suck at budgeting and I’d really rather just know that I’ll always be able to make rent/bills on time.

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22 Answers

Austinlad's avatar

I’ not sure your bank will automatically transfer money between accounts but you can certainy have as many as you want and make your transfers online.

marinelife's avatar

There is no reason why you cannot do this. You will want to make sure to get no fee accounts (which may be difficult without direct deposit).

Seaofclouds's avatar

You can have as many accounts as you want. If you find that you definitely can afford to have money put into your “spending” account each month, you could probably set it up to be directly deposited into that account each month instead of worrying about transferring money each month. All you have to do is ask your employer about direct deposit and then tell them what you would like to do. They may be able to do it for you. (I use to have 90% of my pay go into my account and 10% of my pay go into my son’s savings account all through my direct deposit.)

Adirondackwannabe's avatar

@dumbteenth You can setup as many accounts as you want and they can automatically transfer whatever amounts you set up. You might want to consider a credit union. They generally have lower service charges than banks. Your idea is very practical. Most people live off whatever is in the checking account without regards to saving. Having a regular set transfer to another account is a great way to save.

GeorgeGee's avatar

Yes it is possible and feasible, but ANOTHER way you can do it is to open two separate checking accounts, and have your employer deposit $300 into one account and the rest into the other. Most employers can handle that. Both checking accounts should be free then, without a minimum balance, since both have direct deposit.

Austinlad's avatar

Well, I learned something. Thanks, all.

wundayatta's avatar

If I understand you correctly, you want an account where you save for the long term, right? I have to laud you for doing this kind of planning. If you put away as much money as possible in this account, not only will you have money for emergencies, but you will also get a big head start on your retirement account.

If you are seriously saving, then instead of a bank savings account, you should consider investing in a way that will earn you more than 1%. The simplest way to do this is to invest in mutual funds. Vanguard is a company that sells mutual funds. They take less out than almost any other fund in terms of fees.

You should invest in something simple, so you don’t have to think about it. The Asset Allocation fund has done well over the years (although that doesn’t mean it will continue to do well—look at the economy). Vanguard does all the thinking about how much should be invested in stock and bonds and what kinds of stocks and bonds.

If you use Vanguard or any other mutual fund company, your account is easily convertible to cash, if you need it.

As far as accounts are concerned… I have no idea how many my wife and I have. We did simplify recently—we had a checking and savings account, and we would keep our money in the savings account, where it earned higher interest, and they switch it to the checking account when we needed it. Nowadays the difference in interest rates between checking and savings is noticeable only by an accountant wielding a microscope.

We also have all kinds of retirement savings account. We’ve both worked at several firms, and have retirement savings accounts from them. Some are called 401Ks, and others are called IRA rollover accounts. We also have IRAs of a couple of varieties for each of us—some pretax and some post-tax, as well as education IRA’s for the kids. They used to have savings accounts for college, but we raided that to pay for their elementary school education.

It gets quite complex. Or it can get quite complex. Three accounts ain’t nuthin, kid. Wait until you’re married with kids. Life will never be this simple again.

I can’t even remember the last time I only had three accounts.

downtide's avatar

I think it should be possible. I have two personal checking accounts; one main one, where my salary is paid in and I pay most of my bills out. Then I transfer a small amount per week to another account which I use only if I want to make purchases online. The reason I do this is that if ever my debit card details get stolen online, the worst they’re going to get is £50 0r £100, they’ll never have access to my main account.

I also have a few savings accounts and ISAs of various terms but there’s not much movement in or out of those accounts at present.

josie's avatar

Depends on the bank, of course. But I do it all the time. I have an Xmas account, vacation account and day to day account.

JLeslie's avatar

I am not sure about your bank, but places like fidelity, or Vanguard as mentioned above, can automatically take money from your account I believe. Especially accounts like IRA’s, but probably other accounts also. www.fidelity.com their customer service people are fantastic, 24/7 shortest wait times very late at night.

I got confused reading your question but here is what makes sense to me.

- Auto-deposit from work to a checking account
– A savings account
– Auto-withdraw from either checking or savings to a “long term account.” You may want to have this withdraw from savings where you know you have the money to always cover the withdrawal.

We pay our bills online, and the same time we transer leftover money in checking to our savings, so we control that and can adjust for big spending months when maybe nothing or very little is going to be saved.

It is a very good idea to think long term, starting young is the best way to wind up with a lot of money when you retire. Shelter your money in a Roth IRA is a good way to go and contributing to your companies 401k. But, my advice is to have at least 6 months of expense money in your savings, in case you lose your job or God forbid can’t work for a while. You probably don’t have that yet, so I think it should be a priority to work towards over the next couple of years. If you spend $2000 a month to live, that is $12,000. You can contribute to your IRA as late as April 15, 2011 or 2010 tax year, so you can push that of a little and still get the benefit. The thing about IRA money is there is a penalty or withdrawing early, before age 591/2, so you don’t want to be so tight on regular saving that you have to dip into retirement savings. 401K’s can give you some free money, because companies sometimes give some matching dollars, which should not be passed up. At minimum contribute what they will match.

Lastly, never keep all of your money in one institution. FDIC does keep your rmoney safe, but still better to be safe than sorry. I once had money frozen for 3 months in a savings and loan. It was not FDIC insured, but it taught me a lesson.

Tobotron's avatar

As far as having money transferred automatically to another account sure, you just set up a standing order on the account that has your money paid into it…then this way every x day of the month the set amount is transferred to x account(s).

I would however say that having 3 accounts for this purpose is very nonsensical, you run extra risks of accidentally hitting red on one or two of the accounts (excluding the savings obviously). So your increasing the risk of the banks hitting you with a charge.

I would have your pay enter an account (which ever account gives you the best accessibility and lowest charges, in my case my Lloyds graduate account) then have a websaver account for savings, you will get a far better rate and no card so there is a lot lower risk of anything going missing, really though the rate is what’s important on the savings, and you can withdraw money at any time still).

Then I either budget my spending or only use my credit card for personal spends, I always pay it off every month in full, I get loads of air miles, and personal purchases are insured which is what you want.

This will put all your funds in one place but still define them, ultimately there’s no need to over complicate things with 3 accounts…

anartist's avatar

Yes, I do this. But it costs as a transfer, so I do it as a recycling bill payment and it doesn’t cost.
When I was working fulltime, I did what @GeorgeGee suggests.

Reader65's avatar

In New Zealand you could do that quite easily. Also you could switch the money around yourself online, instead of getting your company to transfer your wages to three different accounts. You can transfer it to any fund online, don’t use the same pin number or password for each account.

I do this quite successfully as it is so easy to do. You can keep tabs on your money 10 times a day if you wish, It is as easy as going into the banks, open up accounts, and tell them you want to bank online. Then set up automatic payments from the account your wages are going into, bingo it is done..

asmonet's avatar

Yes, you can do this with Wachovia, I know because I do. I have a Way2Save account, a student checking, and a savings account. Every two weeks $50 is taken from Checking into Savings automatically – something I can change at any time through the website – the Way2Save is an account that takes one dollar for every card purchase and saves it for me as well. I had the Savings before Way2Save, so it’s odd that I have two but it helps me to save more without thinking. I can set up recurring transfers between all my accounts for any period of time, any amount or whatever I want. Just call your bank.

YARNLADY's avatar

We have around a dozen different accounts with different financial institutions and transfer money around between them on a regular basis. Each account has a specific purpose.

I suggest you can sit down with the account manager at your bank and discuss your needs with them. They can advise you on how to use the accounts to your best advantage.

BarnacleBill's avatar

The easiest way I’ve found involves two checking accounts and a savings account. Account A gets the direct deposit, and fixed payments (rent, car, student loans, as an example), plus utilities. This account has no checks or debit card associated with it. Account B is discretionary spending – groceries, eating out, clothes, gas money, gifts, etc. Things where you can spend less by choosing to spend less. The savings account is to build up an emergency fund in case you get laid off.

The way it works is to deposit the salary into Account A, and transfer money into Account B, and the savings account. You should leave more money into Account A than you actually need to cover your expenses. This forms a pool of short term savings for big ticket items—extra money for car repairs, to buy a new car eventually, go on vacation, etc. Account B money is yours to do with as you will, but keep in mind that you don’t have to spend it all, and it, too can become a form of savings for less expensive items but still costly – a new iPod, replacing your cell phone, holiday gifts, a new winter coat, etc. The savings account should be for working towards having enough money to cover at least 6 months of living expenses, in the event that you lose your job at some point.

jaytkay's avatar

Everywhere I have had direct deposit, they would deposit my check to different accounts, even different banks.

I used to send 90% to my credit union (they have the best rates) and 10% to my bank (which has an ATM on every corner).

Marodr13's avatar

I feel that you have the rights to do whatever you want.. i actually think its a smart idea to have a savings account for emergencies and one just for your spending… and another for your direct deposits.. You may have to go to a different bak but just check with whom you are working with already. Good luck with your decision…

CyanoticWasp's avatar

If you really want to be adult about this, then get used to putting all your eggs in one basket and then watch that basket! (I can’t take credit for it; I think that might have been a line from Calvin Coolidge.)

Seriously, though, you need to get used to the idea of ‘having’ money and not feeling the urge to spend it just because you do have it. Set up a budget, a plan to spend the money you need month by month to keep yourself going: rent, groceries, auto / transportation expenses, utilities and phone. Then you need to learn to stick to that budget, even though (we hope) you have cash building up in your bank account. Periodically, as your budget allows and you have some cushion left in the account, make a plan to invest your excess in whatever vehicles suit your risk tolerance, investing experience and education. Broaden your investment horizons to plan for your future right now by investing the maximum that you can (the maximum that you’re ‘allowed’ would be even better) in your company’s 401(k) retirement plan. After that, start to look for even more investment opportunities. If none come along right away, or if your analysis (or your trusted advisor) tells you that this isn’t a good time for what you have in mind, then buy Certificates of Deposit as a way to salt that money away for awhile and keep earning interest.

That’s the way an adult would do it. Putting money into different banks and/or different accounts is a child’s game. Don’t play that one.

plethora's avatar

I didnt read the thread. Can’t imagine what could be said about this. The answer is yes.

bewailknot's avatar

I have a membership account at a credit union, 2 savings accounts and a checking account at the same credit union. I have direct deposit into all 4, but I would only need DD to one to keep the accounts fee-free. When I have extra I can put away I transfer via ATM or automated phone system.

lita's avatar

PNC has three bank accounts one for spending, reserved, and growth. Growth is considered the savings account.

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