How to utilize multiple savings accounts to reach your goals
Prioritize your savings with multiple accounts
When you were a kid, putting coins in a piggy bank was easy. Often you had one goal, like a new video game or pair of shoes.
As we get older, our priorities shift and expand. Saving for all of them at once doesn’t require fancy software or an expensive safe, all you need are a few savings accounts and the discipline to add to those accounts every payday. Knowing how much to deposit into each account starts with outlining your expenses.
Defining your wants and needs
It’s important to know the difference between a want and a need. Food, clothing, housing, water, communication and healthcare are all needs. Typically, you can’t cut corners or cut costs on these necessary expenditures. By adding up the cost of all of these needs—including your monthly bills and other expenses like groceries—you can determine how much money you have left to direct to your wants.
Follow the 50/30/20 rule
This rule says that 50 percent of your monthly income should go towards bills and other needs, 30 percent should go towards savings for things such as retirement and emergency funds, and the remaining 20 percent can be dedicated to your wants. That 20 percent is what you will be using to fund your multiple savings accounts.
Identify your goals
What do you want to accomplish with your 20 percent? Do you want to save for an annual vacation? Are holidays important to you? Would you like to save for the down payment on a house? Write down and prioritize at least three savings goals. Depending on how many goals you have, label each with a percentage. For example, maybe “vacation” has a 40%, “house down payment” has a 30%, “new television” is 15%, and “new smartphone” is 15%.
You can use that information to name your new savings accounts.
Log into online banking
To add multiple savings accounts to your First Tech membership, just log in and select “Apply” on the left side of the screen. Now, look for “Savings Account” and choose “Learn More.” For simple savings, the Carefree Savings account is likely the best option. Walk through the application for each of your new accounts. It might take up to 24 hours to see the account in Online Banking after you’re approved.
Now you’ll want to change the name of each savings account. To do that, select the account and look for the pencil icon next to the name. Click that and you can name your account with up to 25 characters. You can even add a color to better identify the account. For our example, you would name one of the accounts VACATION 40%.
Once you’ve opened all of your accounts and named them, start to add money to them every month using the remaining 20 percent of your monthly income. The amount you deposit into each account depends on its indicated percentage.
If your 20% is $100, you would deposit $40 into Vacation and $30 into the account for your down payment.
Time is on your side
By funding your savings goals every month, your accounts will slowly grow. Plus, it’s a great way to see how much you can spend on your next vacation without going into debt, or determine if you should adjust your priorities to better meet your needs.