I've been tossing this around for a while and cant figure out if it's a good idea or not.

I want to open up a separate checking account for

Main Checking Account
1) Mortgage, Homeowners Insurance, Taxes
2) Car Payments, Insurance, Taxes
3) Utilities
4) Daycare, Diapers, Formula

So I have the main account that everything gets deposited in. Then from there I deposit the necessary amount into each account. and the payments are on auto draft from their.

Does anybody else do this??

I don't ... and never would.

Look up Ynab.

Seems like a lot of extra work with little benefit.  It would be better to have a single expense account and have all the withdrawals listed on one account. Then once a month extract the values and place in more detailed spreadsheet. Having that many accounts also increases the chance of overdraft issues.
with that said we do have a number of accounts. One main for all expenses and individual for checking and savings.

I wouldn't but only because of all the extra junk mail I'd get from the bank.  Just set up an excel sheet and track everything

That sounds absurd.

When I bought my house I opened up a checking account with the local bank the mortgage is through. I opened it with 2 months payment as the initial deposit. I have it set to auto pay half my mortgage every 2 weeks and I transfer a little more than 1/4 payment from my main checking account every week. It gradually grows, I pay my quarterly sewer, yearly insurance, misc incidentals like replacing my water softner. Its been working great for me, a year and a half later I have made 2 extra payments and have almost 3 months payments in the bank.

Not to be argumentative, but how is this better than just writing  a check, from your regular checking account, every month?

For me its just an out of sight out of mind thing. I know i transfer x amount every week when I get paid and everything else takes care of itself. I check it every once in a while to see where im at on payments and what the balance in the account is.

Thanks for trying ... I guess I'm just too dense.

If it works, do it!

That sounds way confusing for me. We have one checking account and two savings accounts.  One of the is for an emergency fund and takes care of a personal loan at the credit union. The other is for saving for periodic expenses such as tires, quarterly payments, etc.

Terrible idea.

Poor people think in buckets.

Don't be a poor person.

I

In his exact case, some banks/lending institutions will give you a slightly better rate if you open an account with them or set up automatic payments with them.

why?
to track the amount you spend on different expense types?

much easier ways to do that with less paperwork headaches
http://www.gnucash.org/ for example

I can not think of any possible benefit of doing this. Most likely you will screw up and leave an account short and get NSF fees.

Glad I asked before I did it!

Currently we have 2 checking accounts and 1 saving account. All income goes into checking#1 account and then I deposit our weekly allowance in checking account #2. We also auto transfer money to the savings account twice a month.

My question is, how do I know when I have extra money in account #1 at the end of the month. Do I just try to keep a min balance of like $1k or $2K in the account and on the last day of the month transfer anything left to savings or towards debt?

Create a budget.  You should pretty much know what your expenses are each month.  Your utility bills might fluctuate a bit, but not so much that you can't use last years payments as a guide for future payments.  Whatever you paid for electricity last July should be close to what you will pay this July.  Extrapolate that budget out to the end of the year and you should get a good idea of any extra money you will have and apply that to debits you want to pay down.

Ok, that's pretty much how I did it last year, except I didn't really budget how and where I was spending money. I guess that is what I will concentrate on this year.

We do a zero based budget out of one checking account. And we stick to it. There is no question where the money goes then.

IM sent.

I would HIGHLY recommend mint.com for your situation.
It's free and super simple to use.  The first time you sign in you will add your bank accounts and it will download your transactions.  From there it will try to create an "automatic budget" based on prior transactions, you can edit it from there.
From then on it will download transactions automatically and attempt to put them in the proper category (which you can edit), you can look at the budget page at anytime to see where you stand for the month in any particular category.

What's a zero based budget?
This is an area I need to improve.

Run the checking account down to zero. Every dollar goes somewhere.  We pay all the major bills, put money in savings, and get cash for groceries, gas, fun money, supplies. Not hard to wonder where your money is going if you tell it where to go before payday.

This is the biggest thing I have learned from reading Dave Ramsey.

I put all my money for bills in one account, then spending money in the other. So for example, mortgage, car, utilities, go into one account, the amount I budgeted for food, gas, entertainment goes into another. The excess goes into the bills account where it is either saved, invested, spent on hookers and blow, or whatever I want.

ETA: It is all handled through direct deposit.

I do something similar. Once I got my single checking account hacked and I had to shut down everything and reset all my auto payments. So I broke up my expenses into mortgage, utilities, spending, savings and business.Since my spending and business cards have the most exposure, I can easily replace them without having interruption to my mortgage and utilities.

BTW each account has it's own direct deposit so there is no shuffling of funds.

to OP's later question about how to know what apparently surplus money in your checking account you can spend or not, how to budget...  
You have to have a budget based on your take home base salary (excluding overtime, bonus etc)
1. total up all your routine & predictable montly that are not optional (e.g. mortgage, utilities average, life ins, auto ins)
2. total up all your annual bills and divide by 12 (e.g. annual home owner/renters ins premium, vehicle reistration, membership dues)
3. total up all your routine predicible bills that are optional (e.g. cable, gym membership, magazine subscription etc).  
4. figure how much $$ you need to give the wife to buy groceries, keep the gas tank full etc/month (household stipend/allowance)
5. Add 1-4 & subtract from your monthly take home pay to get your monthly take home salary surplus
6. Decide how much of that surplus you two want to delegate for debt, savings, charity & to just spend on fun/toys etc.
7. decide what you will do w/ extra surplus you may make from overtime, side work etc (e.g. half to save for house, quarter to debt, quarter for hookers/blow).

You will spend money on wants, not just needs.  The best way to ensure that you dont' break your budget w/ wants is to delegate a certain set amount that each of you gets to spend on whatever you want w/o having to check w/ the other etc.  Giving yourself an allowance to blow satisfies this urge & gives you some reference & a sense of limitation.   Me & the woman each gets $X every month for whatever.  Don't bee too skimpy w/ this bugetary item either or it will be broken...  It is best to distribute this money as cash (same for household expenses stipend IMO).  

Similarly, give the wife the monthly houshold budgeted allowance as cash, maaybe once per week, whatever she wants.  You do the overall budget, she budgets how she is going to divide that money b/t groceries, toilette paper, gasoline etc.

I have a vinyl zipper pouch thing in the safe that I begged from some bank years ago.  There are cash envelopes in there.  If one of us (or the household) uses a credit card, we put that amount in cash in an envelope for that card.  This ensures that balance gets paid whenever I get a chance to do the books & that we are not spending outside of the budget.  There is anotehr that is parrallel and interchangable w/ the main checking account...

As to multiple accounts question.  I do, but nothing like as OP suggests in OP.  I have two banks, one local bank, one local credit union acutally as I am all against the big megas for whta it is worth.  

So, in the main bank (CU), I have one savings & one checking, where we have ATM cards, cheques, online banking, etc.  Most of my pay is depositied in the checkings.  This is where routine montly bills & expenses are paid from.  For annual bills, I total them all & divide by twelve (months) to get the monthly total for them all.  I have an automatic monthly transfer for that amount from the checking to that savings.  When I happen to have to pay some annual bill, I transfer so much from the savings back to the checkings to cover it.  This keeps excess balance from building up in the checking account that I might think is extra surplus and be misallocated.  This is a way to do the montnly zero balance budget when you have bills to pay that do not come due every month, though I never quite zero out he checkings account, i keep about a $500 minimum balance.  


In the second bank I also have one checking & one savings, both are fed by portions of my pay direct deposit.  The savings acct is for unexpected large expenses, such as an appliance failing, major auto repairs, speeding tickets, you know, things you you cna't really budget but you need to set aside for.  The checkings account is used to pay a few insurance premiums w/ bank drafts: auto, life, disability.  These are bills that I consider it to be absolutely critical that never fail to be paid on time.  I would pay medical ins through this as well but we have it from my job.  This account is used only for those bills, NOTHING ELSE.  I do not even have any cheques for this account, I do NOT use the ATM cards for these accounts.  This keeps these accounts from being compromised.  Also, having to go in person to make a cash withdrawl makes it harder for me to casually take money out of that savings account.  

TLDR: 4 accounts, 2 banks

Bank 1:
checking: monthly bills/expenses
savings: annual bills

Bank 2:
checkings: critical monthly bill bank drafts
savings: irregular expenses/long term savings

OP, IM me your email  if you want a copy of my blank spreadsheet w/ formulas in there to figure out your montnly income & bills & to calculate your total debts & assets.

please explain this sir.

Google'd & got nothing