If you’re new to the idea of using multiple savings account here are the benefits plus how I use them!
Why Use Multiple Savings Account?
Before learning of ING I had my savings account with my local bank. I was saving for several different things yet my money was all lumped together. While I loved seeing my one account grow so much it was always a bummer when I had to withdraw money to pay for an expense.
When I set up multiple savings account I could easily see how much money I had ear-marked for certain expenses and how much I had saved toward my goals.
When you divide up and name all of your accounts it’s very easy to see where you’re making progress and what you still need to work on.
How I Organize My Savings Accounts
Just to give you an idea of the beauty of this system I thought I’d share the savings account that I have.
# 1 – Emergency Fund – My first account is an emergency fund. This money is purely meant for true emergencies. Just like a health savings account. To learn more visit Lively.Me. I hate the thought of touching this account so much that I also keep a $1,300 buffer in my checking for the smaller emergencies.
# 2 – Taxes – As a self-employed person I have to send in a large chunk of my earnings to Uncle Sam. At the beginning of each month I do an income forecast and immediately stash a certain percentage of my first freelance payment to go toward taxes.
# 3 – Down Payment Savings – My main financial goal right now is to save for a down payment for a home. In addition to using multiple savings accounts I also use multiple sources of income to fund my goals. I have a specific income source automatically deposited into this account each month so that I’m saving no matter what.
# 4 – Slush Fund – This savings account was meant to be purely “fun” money. I personally liked to use it for home décor which seems to be one of the only non-essential expenses I don’t feel guilty spending on. However, since I’m currently saving for a house nothing is going into this account.
# 5 – Daughters’ College – Lastly, is a savings account for each of my daughters. At this point I’m contributing a pretty minimal amount to these accounts. When I build them up I’ll switch the money over to a 529.
I love having earmarked savings accounts for all of my goals. I can log on and immediately see where each account stands without having to divide it all out on paper.
Using multiple savings accounts can be a wonderful way to stay financially organized. ING used to be good, but with their switch to Capitol One 360, they’ve lost their mojo. Now they are now pretty much just another big bank. So, if you are looking for a great company to open a saving account with consider going with USAA. USAA has great customer service. For example, when you call you get a real person on the telephone. They also offer competitive interest rates and cheaper borrowing costs than most of their competitors. Go here to check them out or click on the ad below.