There are conflicting messages about your savings accounts. Some say that you should have only one or possibly two, and that the rest of your money that is set aside for savings should be in other financial vehicles like certificates of deposit, money market accounts, etc. Others say that as a way of managing your money, you should have multiple savings accounts with purposed amounts for specific tasks. Who is right and who is wrong?
It appears that those who have an active role in managing their money are those with the highest number of accounts. Being able to place money into a specific account for a specific purpose helps you to avoid using it for another reason. This is a key point in making savings a major part of your financial activities. Here are the ways that you can use your multiple account strategy to your advantage.
Easy Monitoring Sign up for online access to your savings account so that you can watch the balance as it grows. Need to know how much you have at any given moment? Sign on and see.
Keeps You On-Track Being able to see your account balances grow and reach your goals helps you stay focused and on-track. Even if it is just a few dollars into each account, watching them grow at the same time is exhilarating.
Specify Categories of Savings You can categorize and label your savings. Giving each account a name helps you to be able to visualize your goal. It means more when you see what the money is accumulating towards.
Make it Automatic One way that you can help make this effort a success is by setting up automatic deposits into these accounts. Most employers now feature automatic deposits from your paycheck into a bank account or accounts. Even though you might be limited in the number that you can set up, you can always establish one main account from which you make deposits into all of the others - kind of like a clearing account.
Watch it Grow Celebrate the growth with other family members. Talk about the goals that you have for the money and how it will benefit everyone. Start Over Once you have made a purchase with the money, begin again. Keep your deposit strategy going so that you start saving automatically for the next goal. Give the account a new name based on a new goal, or use it to accumulate money for a similar purchase like another vehicle. In this way, you will be paying yourself, and avoiding paying interest to a bank or lending company.
Document Your Accounts Write all of the information down about your savings accounts. Record the name of the bank, account number, phone number, web address, username and password into a journal. Do not save it in a document on your hard drive because of security concerns. Use a small fireproof safe in your home to keep the journal. This will help you keep all of your accounts organized.
Taking an active role in saving money like this will help increase your awareness of your financial situation and help you be better at managing money overall. You will notice that your attitude towards expenses and spending will change. You will become more conservative and less willing to spend on frivolous things. Learning how to live like this will help you reach your goals sooner.
Saving is mandatory with economic conditions as they are for most families. And, the other benefit is that it teaches everyone the importance of saving – and that is an attitude we all can emulate.