How Starling Bank revolutionised my business and personal banking
Disclaimer: I have affiliate links for Starling on my site but I won’t get any sort of reward if you sign up to an account with them as a result of this blog post. They will however plant a tree, which is rather nice.I’ve always been able to cover the bills, but there’s rarely been much surplus money to work with. When I became a business owner, I knew things had to change.
As a child of the 80’s, I had my first taste of financial independence in the 90s. A time when financial institutions fell over themselves to give you credit (remember those interest free loans for CD players, and student overdrafts with banks competing to try to hook you as customers for life?)
Traditionally, I’ve not been great with money. If I had any, I’d spend it. Ironically, when I had very little I was always pretty good at being thrifty (I guess I’m pretty good at extremes generally).
But after becoming a business owner, I decided it was time to change my money mindset for good.
Debt filled 2000s
As we entered the 2000s, before the Great Recession; credit card debt, auto loans, and student loans soared to new heights. Banks offered 110% mortgages so you could buy a house and kit it out. It was all so easy, and led to an unhealthy relationship with money.
There was always a credit card I could take out or loans that would cover things. I never ‘ran out’ of money, I ran out of my debt facility, which was a lot worse.
By this point, I hated the lack of control, and was determined never to get myself into debt again. I reduced my overdraft to £100 and vowed to never own a credit card, catalogues, or any other form of debt.
Money mysteries
Even though I felt disciplined with my debts, budgeting was still an issue. I’d often think “where’s it all gone?” at the end of the month. I searched for budgeting options to make life easier. I had to figure out what I was doing wrong, and fix the negative self-talk about why I was ‘bad’ with money.
Enter Starling
With two kids and an online business, I spend a lot of my life online, organising, working, researching. I also LOVE software that puts the customer’s needs first and I’m the opposite of ‘this is the way we’ve always done it’.
Switching to Starling changed everything.
The first reason I loved Starling was the functionality of the app. I can use the one thing I always have to hand, my phone, to see in real-time when invoices get paid. Customer service is super responsive, so I get paperwork I need and can check my balance if I want to make an investment in my business instantly.
Spaces: the game changing feature
Budgeting issues resolved with help from your bank? Yes please. And, wow! Spaces were the perfect solution. Essentially, they’re sections within your account where you can siphon off funds into - but this works like a budgeting app incorporated in your bank account.
Say you have £1,000 in your account - you can easily pop £500 into a space, and call it a Savings Space.
When you check your account you’ll see £500 as a live fund, but if you check in your spaces you’ll see you have £500 in Savings. It’s hard to explain until you try it in real life!
Let me summarise the main benefits:
Accrue VAT and Corporation Tax - this had me fall in love with the feature. I could accrue without having to have them in separate accounts. I’d get a notification that an invoice had been paid, head to the app, transfer 20% to my VAT Space and 20% to my Corp Tax Space. When due, I’d draw down the amount back into my main account to pay it.
I can save more ££ in my business - annual subscriptions (e.g Squarespace) offer a discount if purchased yearly. So if I buy the annual subscription, work out the annual cost broken down for each month, I’d then accrue that amount so by next year, I’d have the money in my ‘Squarespace Space’ ready to draw down. It’s almost like getting the benefit of an annual payment discount whilst paying for it monthly.
Spaces worked nicely driving efficiencies in my business. So I wondered if I could apply it to my personal account.
Personal banking savings - Household bills come out of our joint account, then our personal accounts are for ourselves and miscellaneous things. I didn’t really have lots of subscriptions myself, so I instead used spaces to plan my weekly budget.
I created weekly spaces - 5 in total to account for longer months. Initially I did this manually but Starling have automated this now, so it happens automatically each month. In the interest of keeping things simple (note - this is not my actual incomings/outgoings - purely for illustration purposes!)
Let’s say I get paid £1,000 every month. I’d just split the £1,000 into the following spaces:
Week 1 space - £200
Week 2 space - £200
Week 3 space - £200
Week 4 space - £200
Week 5 space - £200
Each Sunday night I’d draw down my allowance for the week.
Immediately this stopped me splurging on a handbag at the beginning of the month when I thought I had lots of money in my account (and running out by the end of the month!) I didn’t spend my weekly allowance and would roll it over to the next week, or move to a Savings Space.
I tweaked this, as I went to the beautician and hairdresser regularly. So I worked out how many times a year I went and divided this total estimated spend by 12 and accrued this into a Wellness Space. This worked out around £100 per month, but I decided to make this £150 so that excess could be used towards treats like a spa day when I had enough surplus.
So the weekly budget would look like this:
Week 1 space - £170
Week 2 space - £170
Week 3 space - £170
Week 4 space - £170
Week 5 space - £170
Wellness - £150
Abundance
Honestly, I don’t think I’ve ever felt so abundant in my whole life.
I discovered, for the first time ever, I got to the end of the month in credit on a regular basis without feeling like I’d had to go without in the second half of the month. It was at this point I had a massive mindset shift with my money.
I stopped reactionary spending and started being honest with myself about how much things cost. I wondered if we could apply this principle to all of our spending and really make a difference with our relationship with money.
Sorting my personal account was straightforward. Because I didn’t have a huge amount of regular bills coming out of that account, so the system worked really well.
Joint account joy
Could Starling work it’s magic here too? Like many joint accounts, ours takes a constant battering; money coming out monthly, annually and termly (September and January are always killers)
We wanted to see if this could help with the task of getting money together to pay for holidays or days out with the kids.
And what if we could accrue money for all of these areas - rather than swearing under my breath when I realised I forgot the annual football subs or swimming lesson fees!)
To begin, we’d need to accrue money whilst still having bills to pay in month 1 (ouch!)
Example: swimming lessons need £50 per month to be accrued (approx £200 per term multiplied by 3 terms and then divide by 12 months) Starting this process in September we’d have to spend £200 and accrue £50.
We felt that the 12 months of uncomfortable figuring this out, would be worth the pain when we reap the benefits. And it was.
It was an opportunity to really reflect on our outgoings. When was the last time we went to a National Trust property? Did we really need Netflix, Amazon Prime, Now TV and BT Sport? If we wanted to keep them, could we get rid of one for 12 months as we figured things out.
We created spaces like:
Birthdays - to cover expenses for our birthdays and wider family members)
Car / Petrol - costs for both our cars and also any servicing requirements and MOT
Christmas - to cover Christmas fun and presents
Entertainment - for meals out or days out
Football subs - annual football club membership for the kids
Groceries Week 1
Groceries Week 2
Groceries Week 3
Groceries Week 4
Groceries Week 5 - sometimes we don’t need this 5th week and so it goes in a savings pot or towards something fun like our entertainment space.
Home Insurance - I hate that you get charged more for paying your insurance monthly. This will allow us to accrue monthly but get the benefit of annual payment. Also if we manage to save money when we negotiate then there’s a bit of leftover to go into a more fun space like Entertainment
Kids clothes - School uniform and regular day clothes
Savings - rainy day fund
Holidays
Dog - vet bills and doggy day care
Swimming lessons
Window cleaner
This is just a selection and we’ll refine this list over time. We only really started doing this in December 2021 (a couple of months ago at the time of writing but we’re already seeing a massive difference in how we FEEL about our money).
Starling’s feature - Bills Space
This is a new function by Starling, and it’s changed things for the better.
We can automatically move over the amount required is regularly paid to standing orders or direct debits. Utility bills, broadband, mortgage payment (all the boring stuff) automatically gets paid from this space.
This means the money sitting in your visible account is a real idea of how much money you have, i.e. money that is not promised to someone else either on a monthly basis or otherwise.
Mindset shift
All this can take a bit of getting used to. If you look at your account and see £100 and need to get some fuel, you may initially panic, but then realise you just need to draw down the amount.
Ideally you’d fill up and then draw down the exact amount you spent.
Revolutionary
I honestly believe this system has revolutionised our whole approach to money.
It’s made us excited about all the things we can do and plan for, rather than making us scared of looking in the account. This is why I wanted to share this blog. It’s made such a difference to us I wanted to hopefully help someone else.
Let me know if you’re with Starling bank in the comments below and whether you do something similar?
Do you think I’m weird, loving my bank so much, or are you equally enthusiastic about Starling?
If you’re interested in checking out Starling then just click the link below.
I won’t gain anything from you signing up, but Starling will plant a tree if you sign up as a result of clicking the link (and isn’t that great!)
All information here is from my experience as a working mum, with the intention of sharing my honest experience that might help you - I’m not a financial expert, just sharing what has worked brilliantly for me.