Bank Accounts with Sub-Accounts

Sub-accounts can be extremely useful within savings accounts, transaction accounts and small business accounts.  Here are some suggestions to get you started when determining how to use and compare them:

Sub-accounts in savings accounts

• name a sub-account after each one of your children and allocate a monthly allowance to each child. Use this account when you buy items specifically for one child, so you ensure you’re spending the same on each of your children
• name one account for each savings goal you have and divide your monthly savings according to a pre-defined list you’ve budgeted for. For example, you may have accounts called ‘new car’, ‘overseas holiday’ and ‘Christmas gifts’. You may decide to put aside $100 a month towards saving up for a new car, $80 a month towards your holiday and $50 a month for Christmas presents. In this way, you can watch your savings for each item grow, which will give you more incentive to save towards specific goals.
• you could name one sub-account ‘emergency fund’ and put a set amount in this portion to remain untouched unless there’s an emergency. For example, if you have elderly parents or relatives overseas or interstate, you could leave $5,000 in your emergency fund in case you ever need to fly to their aide at short notice in the event of accident, illness or death. If you vow not to touch your emergency fund, you’ll have peace of mind knowing that if anything did happen to a member of your family, you’d have the funds to be with them in their time of need.

Sub-accounts in transaction accounts

• use differently named accounts to keep track of your spending in different areas. For example, you could have one sub-account called ‘utility bills’ and set up direct debits to pay your gas, electricity, phone and internet bills from this one sub-account so you’re aware of how much you’re spending on basic utilities.
• name one sub-account ‘rent’ or ‘mortgage’ and ensure that as soon as you’re paid, you transfer sufficient funds into this sub-account to pay your rent or mortgage so payments are never missed.
• name one account for each leisure area of interest or hobby you have and allocate yourself a set amount you’re permitted to spend per month on your hobby. For example, you could have one sub-account called ‘eating out’ and another called ‘football’. Once you’ve spent that set amount, there's no more until the next month’s allocation comes around.  This can help reduce impulsive spending and help you understand how much you’re spending on leisure interests in your life.
• if you have an investment property, nominate one sub-account and pay any expenses for repairs or maintenance of the property out of this account. This will make tax time more of a breeze, as you’ll be able to tell your accountant exactly how much you’ve spent on your investment property at a glance.

Using sub-accounts within a business account

There's many ways that sub-accounts can assist you and your accountant to keep track of your business finance, for example:

• name one sub-account after each major client you may have, so you can see at a glance if you’ve been paid by that client
• name one after each division of your company, so you’re able to compare the performance of each division
• name one after each product you offer, so you’re able to separate expenses for each product line
• name them after each branch or shop in your business, so you’re quickly able to see which shop is most profitable when you compare deposits from each location