Updated Envelope Method
by K Beechler
I'm always looking for free money (I'm constantly looking for coins on the ground!) and for ways to make my money work for me, yet be quickly (within 3-5 days) accessible as well.
I opened/created accounts at three online banking institutions which are FDIC insured, their interest rates are much better than the brick and mortar banks in town. I named each account and then set up automatic deposit so that every paycheck a chunk of money goes into the different accounts and accrues interest. I just happened to use three online institutions mainly due to already having an account with them or even getting free money deposited into my account after making a minimum years worth of deposits.
I created accounts for Property Taxes, Insurance Bills (Life, Home, & Vehicle), Clothing Fund, Vacation Fund, Home Projects/Fix-Ups, and most importantly an Emergency Fund. For those accounts that I know I won't (or shouldn't) be dipping into very often I make sure that the money is in a higher yielding interest account. For those accounts that I know I'll dip into 3+ times a year I don't really worry myself about the interest rates since I know I'm getting a better one than at the stand alone banks in town.
So now instead of wondering how I'm going to pay the property taxes on our house I can go into that account and have the money transfered into my main banking account (for free). If the kids need new clothes I can transfer money from the clothing fund and pay off the credit card (that has rewards) that I used to purchase the clothes with.
Before doing single accounts per category, I tried to lump all the money into one account, hoping to take advantage of making even more interest on the large balance in the account. However I found it much too difficult to keep track of what monies were for what, even with my spreadsheet to help me keep track.
It's really just personal preference on the number of accounts and I choose to keep the hair on my head by not pulling it out trying to figure out how much money I had left in my vacation fund!