Keeping moneys separate
June 25, 2009 9:14 PM   Subscribe

What's the best way to keep my summer income separate from my savings?

It's the summer between high school and university, and through scholarships (I'm a National Merit Scholar) and working quite a few hours at a part time job during high school, I've managed to save up enough to pay for the entirety of my first year of college, and likely the rest.

I quit my job upon graduating, promptly got bored with my idle time, and got a job waiting tables. I'd like to keep this money separate from my savings/checking accounts at Chase, and either use it at the end of the summer to buy a nice guitar, pay for a trip to Europe, or any number of things. I'm honestly only working right now for the fun of it.

I figure I have a few options: 1) Just tag all the income on Mint as "Summer Income" and tally it that way. 2) Open up another savings account at Chase with my first $300 in income and keep it separate that way. 3) Open up an account at Wells Fargo ($100 minimum balance, no monthly fee for college students) and keep it all over there to ensure it doesn't get mixed in with my money.

What's the most painfree way to do this?
posted by Precision to Work & Money (7 answers total)
I'm no financial genius, but you should probably invest it in something no-to-low risk. ING account, savings bond (is there such a thing in the US?), money market fund, something like that.
posted by Go Banana at 9:28 PM on June 25, 2009

How much money are you talking about? The most fun way to separate it might be turn it into cash and stash it in a special jar (and keep the jar out of sight of any light-fingered friends).
posted by metahawk at 9:29 PM on June 25, 2009

Best answer: Congrats! Opening another account is a nice way to do this, as it gives you a bit of a psychological barrier against spending the money for everyday needs. One advantage to keeping it with Chase is that you can likely transfer money between your main accounts and this one for free and quickly. OTOH, paying any sort of fees for a bank account in this day and age is (usually) stupid, so don't do anything that has an account maintenance fee.

You might want to consider a High-Yield Savings Account or even a short-term CD, depending on how soon you'll need the money. This way you can earn a bit of interest on it. With interest rates so low now, you won't earn that much, but it may be worth it to you. Be sure to choose an account with a suitably low minimum balance such that you won't be paying any account fees. Bankrate has a chart comparing some of the top APYs you can earn right now, though they are generally subject to change at any time.

You might also want to consider setting some aside and doing some self-directed investing with one of the online brokerages. Do this only with money you can afford to lose; i.e. not money you need for college. It would be a fun way to get into the market a little bit, if you're interested in that sort of thing. As always, past performance does not guarantee future results, YMMV, etc...

Finally, this comment of yours is something that gives me pause: "I've managed to save up enough to pay for the entirety of my first year of college, and likely the rest." College is frickin' expensive and not something to mess around with. Certainly, enjoy yourself and do/buy cool stuff if you can afford it, but you really don't want to blow through money that you may later find you will need. I obviously don't know your financial situation, scholarships, financial aid, parental contributions, etc..., but there's a big difference between knowing you can pay for your first year and knowing you can pay for all four. Consider all your expenses in college, including housing, food, textbooks, booze, and incidentals (those late night junk food delivery binges add up pretty fast). If you have the ability to graduate without being saddled by thousands in student loan debt, take advantage of it! OTOH, Europe is awesome! Basically, don't be stupid, but it seems like you've got that well in mind already.

Oh and enjoy college!
posted by zachlipton at 9:31 PM on June 25, 2009

Response by poster: I'm waiting tables, working 4-5 days a week at roughly $120 per day. About 9 weeks maybe? Let's say probably somewhere between four and five thousand. $5500 tops. I'm not concerned with interest drawn, just need a reliable place to store it.

I absolutely can't stand cash, so I'd like to have it in a bank.

Scholarships + savings from work are approaching six figures, and I'm going to an in-state public university with tuition @ ~8k/year.
posted by Precision at 9:36 PM on June 25, 2009

Excellent. I'd probably go for a high-yield savings account then for your relatively short-term savings needs. Traditional savings accounts (i.e. those from Chase) pay essentially nothing. High-yield accounts like those on Bankrate are FDIC insured just like the accounts from any other bank. You might want to also consider a CD Ladder or other strategic use of fixed-term investments with your college funds: if you know you're going to need ~10k in two years, you can put that money in a CD or bonds that mature in that timeframe.
posted by zachlipton at 9:45 PM on June 25, 2009

I had a similar situation where I wanted to stash some money that I earned away from my common use bank accounts. I use HSBC Direct's High Yield Online savings/Payment A/cs. Money transfers to and from other linked banks (there is a verification system in place) are free and they also give a debit card where I can withdraw money from another bank's ATM machines without additional charge for free (upto 3 transactions per month).

I have used HSBC Direct for over a year now and have been nothing but pleased with them. Their customer service is excellent and fast. (account opening can take upto 15 days though as they send multiple postal mails with the username/password/debit card etc).
posted by bbyboi at 2:28 AM on June 26, 2009

+1 on find a free high interest for low access account. I have an account that gives bonus interest rate each month if I deposit more than $11 and dont' withdraw anything. no account fees.
posted by mary8nne at 6:12 AM on June 26, 2009

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