I opened 6 different savings accounts, and it's a game-changer
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Ariana Arghandewal
- I have many financial goals, so instead of one big savings account, I have one for each goal.
- I have money set aside for healthcare costs and emergencies, as well as an account for taxes.
- I also have accounts for big goals like getting a new car and buying a home.
As someone who made her share of money mistakes in her 20s, I'm all about building good financial habits and discarding bad money rules in my 30s. I've been taking a more active approach to naming and meeting my savings goals.
Years ago, I heard some advice from a financial influencer that stuck with me: If you have numerous savings goals, set up different savings accounts and give each a name to correspond with their purpose.
I opened up 6 new savings accounts
Even though I heard this advice many years ago, I haven't implemented it until now. Perhaps the economic instability of the COVID-19 pandemic finally drove the point home to me. But I've recognized the importance of setting aside funds for a rainy day — and not just for fun. So, I finally took steps to better manage my finances. I opened up six new Capital One 360 Performance Savings accounts in the new year to help me achieve my financial goals.
It's only been a few months, but setting up six different savings accounts for my numerous goals has been one of the best financial moves I've ever made. While I've always had a savings account, it was way too easy to drain it and spend it on things that didn't help me reach my financial goals. Now that I've named each account and the purpose it serves, it's really motivated me to achieve my goals. After all, when I take money out of my "Home" account to splurge on a non-essential expense, I'm taking a step back from homeownership.
This method has allowed me to reach four of six goals in a brief period. By gameifying my finances in this way, I'm motivated to better manage my finances (and work harder) to reach my numerous savings goals. It's much less overwhelming to save for a purpose rather than have a generic "savings" account. I'm confident that by this time next year, I'll be close to fully funding all six accounts.
1. Medical expenses
As a freelance writer, I have to pay my own medical expenses, which can add up substantially. In the past, I've overlooked medical expenses completely because I'm relatively young and healthy. With age comes wisdom (and declining health), so I'm seeing more of a need to set aside extra funds for health insurance premiums and unexpected medical expenses. For now, I've put several thousand dollars into this account, which may not seem like much, but I've had precisely $0 in past years.
2. Investing
During the COVID-19 pandemic, I acquired a small windfall by investing in the stock market. I didn't have much in savings, so it wasn't a vast sum, but it made me wish I'd set aside more money for investment purposes. Again, I haven't put a huge sum in this account, but it's a small commitment to start, which I can always increase over time. I didn't want to fall into the trap of overcommitting and not meeting my goal.
3. Umbrella
As a freelancer, my income can be unpredictable, and sometimes I don't get paid for my work until months later. That instability can be stressful at times, which is why I set up an emergency fund account to cover six months of living expenses in case of a downturn. I don't anticipate losing out all income sources in a short period of time, but then again, neither did many of my colleagues during the COVID-19 pandemic. I want to be prepared for a possible emergency, and having money set aside will give me the peace of mind to know I have some time to get a job or find an alternate income source if everything else dries up.
4. Taxes
I'm embarrassed to say that I have never set aside money for taxes in all my years as a freelancer. When it came time to pay Uncle Sam, I often tapped into my savings account or whatever I had in my checking. While I usually had the funds available, peace of mind comes with having a separate savings account to cover taxes. The money is set aside, separate from my necessities and discretionary income. I don't have to worry about or watch my balance to ensure there's enough for my tax payment. It's in a designated account, accruing interest, until it's time to file my tax return.
5. Down payment on a home
For the past year or so, I've gotten serious about buying a home in the future. While mortgage rates are too high at the moment, I want to have money saved up for a down payment once they drop. I don't think I'll need the full amount, but right now, I'm aiming to save $100,000 toward the down payment on a home, plus things like furnishings and possible upgrades. This is my biggest savings goal (and the one I'm furthest from), but an important one I wanted to name and prioritize for 2024.
6. A new car
I'm in the market for a new car, and while I will probably end up leasing one, I like the idea of putting the full cost into a savings account. The money will accrue interest, and if I decide to buy out my lease in three years, there are designated funds I can tap into. A few dealerships in my area are offering attractive interest rates on purchases, which are much lower than the interest on my savings account. So, if I do end up financing a car, I'll come out ahead by making payments and having these funds offsetting the interest rate.
This article was originally published in March 2024.
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