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Every time I get paid, I take some of the money and allocate it for certain uses. I track this in a spreadsheet. This works fine, but it's not what I want in the end. Basically, I think what I want is the "envelope system" (cash in envelopes) but instead of envelopes, I want a full service bank account.

I've considered using pre-paid credit cards for this. The pre-paid CC would have to be easy to add money to. I'd also like to be able to take cash out. All with zero to little fees.

I've also considered opening several bank accounts and using each account for a specific type of spending. My spidey senses tell me this is probably not a good idea.

Any ideas or suggestions?

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IngDirect has this concept of sub accounts inside a main account - that might be perfect for what you are looking for.

To clarify, you basically have one physical account with logical sub account groupings.

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I sort of do this with credit cards. I actually have 4 AMEX cards that I've accumulated over the years. Certain types of expenses go on each card ("General expenses", recurring bills, car-related and business-related)

I use AMEX because they have pretty rich iPhone/Android applications to access your accounts and a rich set of alerts. So if we exceed our budget for gas, we get an email about it.

Do whatever works for you, but you need to avoid the temptation to over-complicate.

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Have you looked at mint? Their budgeting feature can track spending against your budget categories across your checking and credit card accounts. Not the same as the envelope system -- so if you need the built-in limitation that this provides, it may not work for you. But it is a low-effort, automatic system that does the tracking for you if you have your spending mostly under control.

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I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service?

My main concern with using a bank for this would be the risk of overdraft fees

  • 1
    I like the simplicity of "I have this much in an account to spend on x". Tracking my spending is something that I've done in the past, but I don't like it as a solution because there are not hard limits and it takes a lot of work to keep it up (I know about Mint, I've used Quicken). – three-cups Mar 17 '11 at 16:46

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