Use Multiple Savings Accounts for Separate Financial Goals

By Chelsea Baldwin, Contributor, on June 16, 2017

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Here’s the list of items I’m saving up for right now, all with multiple savings accounts:

  • Retirement (15 percent of my monthly income)
  • A down payment for a house
  • A comfy couch that isn’t a cheap futon
  • A New Year’s/30th birthday trip overseas
  • The tax bills I have to pay every quarter

I know, I know. It’s a lot to save up for. But with the exception of the couch and the trip, I don’t expect to have any of it paid for by the end of this year, so give me some breathing room!

I’ve read advice that you should only have up to three major savings goals at any given time, but if you organize your accounts intelligently, I honestly think you can have as many savings goals as you want. As long as you’re comfortable with them taking a little longer to materialize — simply due to the fact you have so many — I see no reason why you shouldn’t save for whatever you want to achieve.

A Safe Place for Savings

Opening a new savings account for each of my major financial goals has been a pretty big deal in helping me make those things happen. At the moment, here are the multiple savings accounts I have in place:

  • A Roth IRA and an SEP IRA for my retirement savings
  • A money market account for my financial cushion (read: emergency fund)
  • A money market account to save up for a down payment on a house and for furniture-buying when the furniture pieces cost more than a few hundred dollars
  • A regular savings account that holds the money I’ve yet to pay in quarterly taxes

At the end of the month, I’ll open another regular savings account to start allocating money for my big 30th birthday trip. In total, that’ll be six different savings accounts, but it’s a strategy I’ve come to swear by, and I don’t care if it seems like “a lot” to others (especially those whose accounts are merely checking, general catch-all savings and retirement.)

The Mental Trick Behind Multiple Savings Accounts

By having numerous savings accounts, I make sure the money I allocate toward each specific goal stays there. So, if I want to take a trip, I save specifically for that trip instead of lazily raiding the money I’ve worked hard to save for a home down payment, which could set me back a number of months with that goal.

It also gives me a clearer picture of where I’m at with my finances and what my money is able to do for me over time. For example, when I noticed how well and quickly my home-buying fund was growing, I realized that not saving as much toward it for a couple months would give me enough money to pay off my car loan approximately 21 months early. That got rid of that monthly expense — and the incurred interest associated with it — boosting my savings power even more after that expense was taken care of.

Saving for something like a tax bill might not be as motivating as saving for a new couch or a trip, but when I see the amounts in each account rising, I get to decide what my priorities are and am more motivated to make things happen in my life. Watching those numbers grow before my eyes every single month keeps me motivated and helps cut down on distractions, making my goals happen faster.

TIME Money writer Taylor Tepper also thinks multiple savings accounts can be a really good idea, even advising you give your accounts different names. “Think about adding . . . a separate savings account or CD each time you conceive a new savings goal,” he advises. “You can even nickname the accounts, like ‘Kitchen Renovation,’ to help you keep up your savings rate.”

If you close your eyes and really think about it, what would you like to save for that may currently feel out of reach? Anything you want to save for can be budgeted with a good, hard look at the numbers — and maybe multiple savings accounts to make sure money gets to (and stays) exactly where you want it.

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