When I talk about my savings, I’m rarely referring to just the one account. Currently, I have three: my on-going emergency fund (which may also act as an additional retirement fund in the future); an “overflow” account that contains enough money to pay for my regular outgoings if I have a bad month on the self-employment front, and an account to cover what I call “semi-regular expenses” that come around once or twice a year. Having asked around to various people that I’m acquainted with, it seems that I’m not alone with my split savings approach. It can be confusing sometimes to keep track of multiple savings accounts, but I’ve developed five great techniques to keep my savings accounts as simple and straightforward as possible:
1. Deciding How to Split Your Money
It can be tricky to know how much you should be allocating to each individual "pot" without feeling that one pot is being favored over the others. Some of the ideas that you can use to help you with your decision include:
- Prioritize your accounts. If there is an account that is especially important to you, it makes sense to give this account the priority. In my case, it's the emergency fund. The "overflow" and "semi-regular expenses" savings accounts are nice to have for extra piece of mind, but they're not as essential to my survival as the emergency fund. If you're saving for material purchases in one fund and financial security in the other, it should be pretty clear which fund is higher priority.
- Allocate goals. Another option is to use savings goals to prioritize an account. You should already have some targets for each of your funds, and it might be a good idea to feed the "pot" that is furthest away from the goal. Alternatively, you can choose to boost an account that is close to the goal for the satisfaction of being able to tick that one off the list. Whatever you choose, you need to stick with your goals until you've obtained the mark you set.
- Still stuck? If you're still unsure how to split your money, choosing the account with the highest interest rate is a good way to go because you know you'll get the best return in comparison to the other accounts.
However you decide to allocate your savings between savings “pots,” you need to keep track of things. Not too long ago, I had all three of my savings “pots” with the same financial institution as my checking account, and I loved the luxury of being able to log into my online banking and easily check all of my balances or move money around. However, at the moment, my savings “pots” are in various financial institutions in an effort to maximize interest. I have to admit that I’m finding it quite challenging to keep track of my savings as a result.
With that in mind, there are some tactics that can help you out:
Whenever I make a transfer into one of my savings accounts, I enter the details into a spreadsheet so that I can quickly see how much progress I’m making. This has been very handy for my accounts where online banking doesn't exist or when the online banking site is down. My spreadsheets aren’t very complicated and generally list the account in question, how much I transferred, the date of the transaction, and if applicable, how much more I need to save to meet my savings goal. It's nothing ground-breaking but it helps me to get a good overview of where I’m at financially, especially since my savings accounts are not in the same place anymore.
If you’re not already familiar with Mint.com, you’re missing out on a great way to juggle multiple savings accounts. The best feature is that you can see everything in one place. You can also set a target for each savings goal and Mint will track your progress to let you know how far along you are. As long as your accounts have online banking attached to them, you should be able to link them to your Mint account without much effort at all.
5. iPhone Apps
While I don’t have an iPhone, there are various iPhone apps that are intended to make your life a whole lot easier when you’re juggling multiple savings account. If you’ve got a Mint.com account, you can download an iPhone app that gives a convenient overview of your linked accounts so you don’t even need to be near a computer. SplashMoney and PocketMoney serve similar purposes for those who don’t have a Mint account. Seeing as I don’t have first-hand experience with using these apps, it’d be great to get some reader thoughts on the best ones out there.
What are your tips for handling multiple savings accounts?