An alternative to separate bank account would be to buy something like VISA travel cards or the pre-loaded cards being advertised now. They operate without a bank account, the value is related to the card number.

TimHare

I've actually tried this in the past, and it has worked out fairly well. The difficulty is remembering to use the correct debit card for the correct purpose. It takes lots of self control, but its worth it to be able to get get finances in order.

mr.smith

For those with trouble budgeting, it seems like the simpler the better. I prefer to use one credit card for everything (debit card only for ATM cash, avoids extra bookkeeping). Just subtract fixes expenses (house, utilities, etc.) from income and what's left is discretionary. If you have your credit card at the bank that has your checking account, it's even easier to keep frequent tabs on balances, and also to do online bill pay. Credit cards are nice (assuming you pay them off) because they let you use someone else's money for free. I get about $500 per year in "opportunity income" (the opposite of opportunity cost)) by using the bank's money for free. That's in addition to whatever points or rebates you get with credit card purchases.

Logical Extremes

This system works well for me, but the thing that trips me up is the delay on deductions from my account when I use the Mastercard portion of the network instead of debit. I think I have a few bucks left and then a few days later, BAM!, there's that stinkin' Carl's Jr. moment of weakness showin' up in mah accountz, causin' teh ovurdraffs.

Apologies for slipping into LOLcat mode there. It's Friday.

jaxun

This makes me think of a great system I found. Stackbacks [stackbacks.com]

I've been attempting to get it going for a while now. I'm getting closer everyday.

Procrastination is not my friend.

jenafer

judging by the pic, someone banks at commerce.

What The Geek

I considered this with my money. You know, just put a leash on myself when it comes to "play money" and the like. When consulting with my logical advisor (read: girlfriend), she asked me -- and I quote -- "why don't you just like...not spend money so frivolously?" Needless to say, my adorable lost-puppy eyes didn't work.

I'm tempted to just start something like this with that giant change jar, anyway. WaMu's got a free checking thing that I might try out.

misterlee

I've been doing this for over a year, and it makes life so much easier. Each paycheck, I reserve my savings and upcoming bills, and whatever is left over goes in the Spending account. Since the debit cards look identical, I used a label maker to ID my "spending" card, and haven't had any confusion.

To clarify, it's not just "fun money" - it's groceries, restaurants, gas, manicures, health, cosmetics, clothing - anything that's not a set bill or expense. So if I decide to splurge on new shoes, great, but I have to live on whatever is left. I'm really aware of my choices now. And I never have to think about what bills are due, or worry about overspending. So much less stress.

Uma

@Uma: I'm pretty aware it's not just necessarily "play money". hehe I just made that generalization based on my spending habits. I end up dipping into my checking account at times when I KNOW bills are coming up.

Dividing it up by "disposable" and "save" = "play money" for me. *shrug* =P

misterlee

My husband and I basically do the same thing. I pay all our bills, deduct auto savings and investments and then we each get the same set amount for 1/2 a month to spend (for groceries, eating out, dry cleaning, gifts, clothes, gas) and when the money is gone we stop spending. We don't use a different account but I keep on top of our balances by checking 4 times a week. It works pretty well for us, we limit our spending without having to budget every penny (I use a spending plan based on prior data from Quicken but not a budget).

SadSam

I couldn't live without my separate accounts! My checking, boyfriend's checking, our joint checking (for bills), a savings account, and an account just to pay of the AmEx. It's the BEST.

wanderthirst

Even easier is to get an American Express card. It's a charge card, not revolving credit. My husband and I use that for all expenses and have our balance emailed to us daily. We've figured out what a reasonable monthly budget is and can see our progress. Since it has to be paid off each month, we're not tempted to buy what we don't need. It's so easy to rationalize things you want. There is a hefty annual fee but we pay it happily because of the great customer service and the simplicity of staying debt free.

JenM3

So this is actually really easy to do with a credit card too. You just have to call up a company and tell them you want a card with XXX credit limit (not everyone has this functionality, but I know CITI used to). Then tell them you never want to go over limit. Alternatively, there are a ton of 'family' cards in the market these days. You can take out a second card with a set spend limit on it, and just use that as your primary card. That way you will still have all the benefits of a credit card (delayed payment, purchase protection, merchant disputes, and rewards earned) without the fear of going over budget.

walkingagh

This is what my wife and I do. We have three checking accounts (all free, by the way): one for me, one for her, and one for joint expenses. We put most of our paychecks into the joint account, leaving the rest in our individual accounts.

I started with a budget that calculates how much we need to set aside for monthly and semi-annual bills (everything from electricity to property taxes) and then set some reasonable levels of discretionary spending. The rest goes into savings. We're left with enough money to enjoy ourselves but its tight enough so we don't blow it all on silly stuff.

Only the individual accounts are accessible by a debit card, so if my wallet is stolen, the thief only has access to a smaller amount of money and can't ruin us. If we ever need more money in one of the accounts, Wells Fargo allows us to move money around very easily online. I don't believe there's any limit to the number or the amount as long as your name is on the account. (We've moved some hefty digits to pay bills in the past.)

Also, all of our accounts also have savings accounts attached to them with overdraft protection. Just in case.

seanmcleary

@Logical Extremes: You stole my words :) I have almost same setup.
Two credit cards with no yearly maintenance fee, One with checking account bank that is used for routine store shopping. Another one is used for internet shopping. I keep all the receipts and those are checked and confirmed every Sunday night before they are disposed off.
One debit card with yearly maintenance fee that is used for withdrawing handy cash. I have my friend's experience from last year. He had loads of issues when Seattle went dark last year, so I prefer to keep some cash handy.
All bill payments are set on auto so on the last day of the month when money is deducted from my account, left over is divided into two chunks to get deposited into 2 separate savings account.
I have started this setup since 6 months now and last year, I earned almost $200 in 3 months as opportunity income, not too bad I guess.
Debit card is definitely good for someone who can not control their spending habits but I don't want to pay for yearly fee (and so this debit card of mine will be discontinued at the end of the year) I check receipts every weekend just to confirm that the right amounts are charged and I am not over-spending. My wife is a hard critic when she notices that money is spent for no good reason, that really helps. IMHO, at the end of the day, its all upto you how you want to spend money. Even using debit card, you can over-spend justifying yourself all useless shopping you did so why not exert some self-control?

Mindstyle

There may be an additional advantage to doing it with a series of debit cards because you can protect against identity theft. If the card or its number is stolen, your exposure is limited to the card's value and the thief would not necessarily get access to your more important information.

VanGogh92

If you live in Canada and can get PCFinacial, when you open an account, they have a Chequing and Savings account, since savings has a higher percentage of interest (3.75% at the current rate compared to 0.5% for chequing) you put all oyur money into savings, and when you need the money you need to transfer the money over ONE DAY in advance in order to get it :) good system, saves me from impulse buys...

korokuken

What's wrong with cash? I've got a basic excel spreadsheet that I use for my budget, and I used to track every single penny I spent. A few years ago I switched to a system where on Saturday mornings I would get $200 out of the ATM and that would be my spending money for the week - gas, groceries, going out, incidentals all come out of that money. When I run out of cash, I stay home and eat out of my pantry for a day or two. Yes, it's kind of the envelope method, but with no envelopes.

Lately I've been trying to save a little more money, so I switched to taking out $100 every five days. I find the system to be pretty effective.

sony_b

This really does work. We use our local bank that offers free checking, with a primary account for groceries, a secondary for home remodeling, and we transfer what we budget to our paypal account to use its debit card for eating out. It works really well. Yes there is some delay during transfers, but this is good it helps you plan. Stopping and thinking about what you are going to spend helps the budget oodles......great tip.

ninelives1972

I started with two seperate cards a couple years ago. I had hired on from a contract worker to an employee of a bank and opened accounts there. We kept our old account and I setup a direct deposit for $500 into it each pay (bi monthly) and thats our eating out/play account. It works out well because we don't have to remember what bills are due and subtract those from the available balance like when we had one account, we know the other account doesn't get used except for budgeted bills.

enine

I do this as well and I use a Capital One Debit card. I have my direct deposit split between my bank account and then 200.00 into Capital one.

What works for me though is to keep a post it note on my card detailing my running balance.

sherab