My savings strategy hinges on me knowing exactly how much I have for each future need (and I’ve decided I have a *lot* of needs.) Though having six savings accounts may sound crazy, I’m pretty sure I’ve cracked the detailed-but-lazy code for budgeting savings. No spreadsheets, or even lists hanging around in Evernote. Just me and my mobile banking app.
I use Ally, which I think in itself is what really helps this strategy. Unlike traditional banks, I don’t pay fees or have to keep minimum balances in accounts. And I can nickname every account, such as “$1500 until the beach!”, aka my “Travel” savings account. That helps remind me of my goal and gives me some motivation when I look at my account to decide whether spending $75 on a new pair of sneakers is worth it.
Here’s the breakdown of my current accounts:
- Emergency. Because we live in the real world, and shit happens.
- Unemployment. Even though this would be an “emergency” situation for me, I like being able to see the balance of this account in terms of exactly how much I have in terms of months of living expenses, in addition to my “emergency” cushion.
- Spending buffer. I know myself, and I spend every penny that’s in my checking account. This savings account serves as an “overdraft” buffer – I throw all of the “spending” money I have in here, minus a few hundred dollars. It helps keep my checking account low (so I don’t *think* I have much to spend) while keeping some cash accessible for when its really needed.
- Travel. I consider this “savings to be spent.” I put money aside here, then when I want to use it for travel I don’t feel guilty from pulling it out of actual savings.
- Car my car is paid for and just hit 120,000 miles, but is 13 years old (and I intend to drive it until it’s dead.) It’s meant no monthly budget item for a car payment but has been a consistent $300-$900 in annual maintenance for the past several years. I have $250 direct deposited in this account each month to plan for maintenance, get used to a car *payment* for when that time comes, and I’m hoping that I won’t spend it all on maintenance and can use what’s left as a down payment when its needed.
- Dog. My dog is almost twelve. He’s incredibly healthy and active. But when the day comes that he needs serious surgery or medical treatment, I’m too attached to him to say no, so I’m trying to sock away $25 here and $50 there so that I won’t need to dip into other savings when that day comes.