You can actually open another savings account and make it work for you!
Saving money doesn’t need to be done in a single account.
Take a minute to ponder what things you find yourself saving for. A trip overseas, your first home payment or perhaps an emergency savings fund.
More than likely you are attempting to save for several different things – all at the same time. Some of you may separate your savings into different accounts while others may find themselves putting everything in one place.
A person’s financial traits tends to determine how many savings accounts a person has, says Holly Peterson, financial consultant and owner of Elite Retirement Strategies in Pocatello, Idaho.
“Some people are more financially responsible when they have multiple savings accounts set up for different goals or purposes,” she says. While others get overwhelmed moving money around the place and give up entirely on the whole idea of savings. There is no “one-size-fits-all” that she recommends.
So if you are dealing with one account or perhaps you have more than one accounts, what your are doing isn’t necessarily wrong. Let’s examine these two approaches and hopefully help you figure out which one will work best for you.
Separating Savings in Order to Get a Clearer Picture
Appointing specific accounts for major purposes assists many folks in keeping their money organized.
Fo Alexander and her husband Ben, of Greenville, South Carolina, deal with seven different accounts. One of the savings accounts is for emergency fund, another one is to covers the future home needs or upgrades. Two of their savings accounts are meant for general savings, while the other three savings accounts are for business related expenses.
Alexander, the owner of the blog and podcast “Girl Talk With Fo” says having more than one savings accounts means they do not have to guess or do calculation to know exactly how much money they have saved for a specific goal. “We wouldn’t manage (our money) any other way,” she said.
Benefits of Having Several Savings Accounts
The money you save for each outcome is allocated to it’s own account. You know the exact amount of money you have actually saved toward each purpose, so when you take out funds for your cruise you don’t have to be concerned that you are withdrawing from your new car fund.
Getting close (or far away) to achieving each savings goal can motivate you to do more and also to save more than if you just saw one lump sum in a solo savings account. Alexander says “Knowing that you are saving for a house versus just saving gives you more incentives to reach your goals.”
Different financial institutions provide varying advantages. You may benefit from the customer service at your local credit union so you have an account there, but you also prefer having your emergency fund stored at an online bank where it’s not as easy for you to make withdraws. Some banks offer cash bonus packages when opening a new account with them along with other appealing incentives.