Using Targeted Savings to Achieve Your Goals
We all have multiple goals that we need to save money for, but most people just lump everything together into one savings account. That makes it very difficult to keep track of how much you have saved for each goal without keeping some sort of complicated spreadsheet that you have to manually update each month.
I’ve discovered a better way to save by using sub-accounts for each of my targeted savings goals.
My online bank allows me to set up as many sub-accounts as I want. I can also give them actual names that mean something and indicate the purpose, which is much more helpful than a simple account number.
Right now I have several sub-accounts set up in my Capital One 360 high yield savings account:
Related – You can learn more about Capital One 360 Savings by reading our full review here.
An emergency fund to protect my family in case of an unexpected financial catastrophe. If I were to get laid off or if one of us suffered a major injury or illness, this sub-account would help keep us afloat.
A vacation fund currently being used to save up for our first family trip to Disney World.
A fund for property taxes. I hate escrow accounts and chose not to use one when we borrowed money to buy our home. Instead I just save money in this account each month to pay the quarterly property tax bill myself rather than through my mortgage.
Kid’s savings accounts for each of my three children. They receive half their allowance in cash to spend on whatever they want, and the other half gets deposited into their online bank account where they can watch it grow.
Targeted Saving Helps You Achieve Your Goals
I’m a big believer in targeted savings goals because I’ve seen firsthand how powerful they can be in helping you achieve your goals. I remember when my wife and I were saving to buy our house we were able to put away a lot of money just by reminding ourselves that the faster we saved the faster we would be able to afford a home to call our own. Each time we were about to make a purchase, we’d ask ourselves “Is this purchase really worth delaying the goal we’ve set for ourselves?” Most of the time, the answer was no.
Without a specific goal to save for you don’t have that extra motivation. For example, retirement is a goal for which we should all be saving but it is too vague and far-off to effectively motivate us on a day to day basis. Saving for a short-term goal such as a Disney vacation is much easier than saving for your retirement thirty years from now. Whenever I brown bag my lunch or skip a frivolous purchase I know that I’m a little bit closer to a week with Mickey and friends.
Transferring funds from one sub-account to another takes only a few seconds so if you want to reallocate your savings to reflect changing priorities you can do so quickly and easily. For example, let’s say you know your house needs a new roof and after you get a few estimates you realize it is going to cost more than you had initially realized. Just log into your account and transfer some money from another fund into your “home improvement” account.
Or if you’re using Capital One 360’s automatic savings option to ensure you are paying yourself first, simply adjust your savings goals to put more money into the accounts you want to prioritize.
Using targeted savings accounts may not seem like a big deal to you, but to me it has been a life-changer. Our savings rate has increased and our finances are more organized than ever. I challenge you to give it a shot yourself and discover the difference. Just sign up for a Capital One 360 savings account and start saving more today.
Latest posts by Mike Collins (see all)
- XTrade Europe Brings Closer Healthy Trading Habits - October 24, 2016
- 2016’s Top-Rated Car Seats - September 16, 2016
- Recent Market Problems Should Not Affect Retirement Plans - September 5, 2016