In days gone by, I had… 3 current accounts, 1 joint account, 1 ISA, 11 savings accounts, 3 credit cards, and a partridge in a pear tree. I was trying to form a digital envelope system which was often accompanied by several paper envelopes and various half started spending diaries.
 It didn’t work.
 I was so disappointed – it worked for ‘everyone else’, why not me? The envelope system is usually hailed as the answer to all financial problems but I just didn’t get along with it.
 Maybe it’s because I’m just not ‘everyone else’.
 I need simplicity to be able to keep up with and stick to a system. As much as I like complex systems and money whizzing about here there and everywhere, I just can’t manage it effectively and it all goes to pot. That’s usually when I give up and crack the credit cards out. My current system is going through phases of simplification, and I’m enjoying paring it down to get it to a point where it works for me.
 This is the current set up:
 1 current account: for daily use and my bills.
 1 joint account: for the mortgage but I’m hoping to convince Mr AF to gradually have more and more of the joint bills in this account.
 3 online savers: one for next year’s household annual bills, one for next year’s car expenses, one for monthly pet expenses.
 1 groceries account: this was my Tesco credit card but now they have changed their system to prevent the card from being put into a positive balance I’m going to either open another current account with my regular bank or use a dormant current account I already have but cancel the overdraft facility. The Tesco credit card will be cancelled after this week’s shopping takes care of the remaining positive balance.
 As you can see I’m using the parts of the envelope system that work for me, but without having an account for every little thing.
 I’m also working on my exposure to debt; I’m fairly sure cancelling down some of my available but unused debt won’t hurt my credit report as I have enough sensible ‘good’ credit on there that I do use. The Tesco credit card is going; I’m sure I won’t miss a few pence worth of club card points every month and I feel freer to seek out the cheapest petrol now I haven’t got it in the back of my mind that I’ll get more club card points if I fill up at tesco. The overdraft on the current account used as my grocery account will be closed, my budgeting in this area is getting a lot better and transfers from my daily to this account go via the faster payment system anyway.
 I have been reading Zen Habits for a little while now and have started putting ideas from there into practice. Time to whittle down to what I need rather than rubbish that I think I need but actually just temporarily want.


5 thoughts on “Simplify

  1. I prefer simplicity too. My version of the digital envelope system (I call it virtual cocoa tins) is to have as few accounts as possible but keep an Excel spreadsheet with a breakdown of the total in each. For example, we have a joint savings account that I’ve broken down into: mini emergency (£500), house maintenance & major items, and leisure travel. Each time I add to (or subtract from) the total, I adjust the amounts in the individual columns. I know what the overall total is but I also know how much I’ve mentally allocated to each category. Seems to work for us.

    • I like that idea a lot! I’m hoping to do something similar with the joint account when we’re in a position to overpay the mortgage and have savings :) thank you for the comment, it’s always really nice to hear how others do things!

  2. It’s so true that what works for everyone else doesn’t always work for you. We have a pretty simply system too – one joint account, one credit card, two online saving accounts and one term deposit to really make us save. We use the credit card to pay for almost everything but pay it off in full every month – it’s so we can get frequent flyer points!

    I try allocate funds via a spreadsheet every month but it doesn’t always work out that way. The best laid plans and all that :P

    • Ahhh I wish I had the discipline to use my club card credit card like that! Having said that, I’m getting quite excited at the thought of closing it down in the next few days! Thank you for your comment :)

  3. It sounds sensible. I think individual envelopes can work if you’re dealing with cash, when you’re mainly virtual it’s seems more complex than it needs to be. Between us we have 5 accounts, plus Dan has a credit card. We have a current account and an ISA each, and a joint savings account. The household, pet and groceries come from my account, other general expenses come from Dan’s. Dan’s ISA has the emergency fund, my is overspill savings (any bonus money, mystery shopping, or left over cash goes in there) and long term savings go into the savings account. We know what our budgets are for various things so we don’t need to separate them that much, it’s easier to manage that way for us.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s