Published in: Banks | Oct. 6, 2019
Can't Reach Your Savings Goals? Try Opening More Savings Accounts
By: Lyle Daly
When you have multiple savings goals, why limit yourself to one savings account?
For consumers who follow a budget and track their spending, saving money often isn’t a problem. What can be a problem is saving towards a variety of different financial goals and upcoming expenses.
You may want to save for a down payment on a home, a vacation, your wedding, or all of the above. You also need to be prepared for those unavoidable future expenses, such as medical bills or car repairs.
With all sorts of things to plan for, you could find yourself stressed and wondering whether you’re putting enough money away. But one simple change to your saving habits could help you relax and ensure that you save as much as you need for every goal.
Why opening more savings accounts can help
Have you been keeping all your savings in one account? Opening a separate savings account for every goal that you have is a better option.
For example, you could set up separate accounts for:
- an emergency fund,
- a down payment on a home,
- car maintenance costs,
- a new laptop,
- a trip, or
- any other potential expenses you’ll have in the future.
You may be thinking that this method sounds overly complicated, but it’s actually much simpler than having all your savings pooled in a single account.
By giving each savings goal its own account, you can better focus on how much time and money it will take to reach that goal. You can also track your progress towards each goal through your account balances.
Let’s say you want to have:
- $25,000 saved for a down payment on a home within five years.
- $750 within a year for car maintenance.
- $500 for a vacation within nine months, and
- $3,000 within two years for a wedding.
That’s several amounts and timelines to keep track of, which can be tricky with one savings account. If you have separate accounts for each goal, you just figure out how much you need to deposit monthly in each one.
With the examples above, you’d be depositing the following amounts monthly:
- $416.67 in your home down payment account.
- $62.50 in your car maintenance account.
- $55.56 in your vacation account.
- $125 in your wedding account.
How to set up savings accounts for every savings goal
The good news is that you can open new bank accounts in a matter of minutes. Here’s how:
1. Choose a bank
Check out a few of the best savings accounts and pick one that you like. The main factor to look at is the account’s interest rate. You should also pick an account without any fees, too.
If your current bank offers a high interest rate on savings accounts, you may decide to stick with it.
2. Apply for a new account
Fill out a savings account application with the bank you chose. The application process shouldn’t take long, but you'll need to provide some standard pieces of information, including your Social Security number and your address.
3. Name the account based on your savings goal
Banks let you name your accounts, so you can choose one that matches the savings goal for that specific account.
4. Set up an automatic transfer to the account
Decide how much you want to put towards this savings goal every month and schedule an automatic transfer from your checking account to your new savings account for that amount.
By automating this, you’ll save time and ensure that there aren’t any months where you forget to make your deposit.
5. Repeat the process for all your savings goals
Once you’ve got a savings account for one of your goals, you can repeat the process for each additional savings goal you have, using the same bank for all your accounts.
The setup process will be faster than it was the first time around because the bank will already have your personal information on file and won’t need you to enter it again.
Reaching every savings goal
If you’ve been having trouble saving money for everything you need or if you’re nervous about whether you’ll reach your financial goals, consider opening more savings accounts.
It’s free, it doesn’t take long, and with automatic transfers, you won’t need to spend time managing the accounts. Just decide how much you want transferred to the accounts and you’ll be able to quickly check on your progress towards your goals whenever you want.
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