Why We Have 10 Savings Accounts (That Have Nothing to Do With Emergencies)


Setting up automatic transfers to multiple savings accounts—each dedicated to a different life expense—was one of the best financial moves my wife Andrea and I ever made. Instead of waiting for a bill to pop up, we started growing our balances a little each month.

The result? We’ve stopped worrying about how we’ll pay for vacations, Christmas presents and other annual expenses that used to blindside us. Because we’ve been saving all year, racking up credit card debt doesn’t even cross our minds.

Here are 10 accounts we’ve used over the past six years to keep our finances (and stress levels) in check.

1. Vacation Fund

Ever found yourself on the beach or with your kids at Disneyland completely stressing out about how you’ll pay for the vacation once you get back to reality? I have—until we opened a vacation fund. Now, we set our vacation budget at the beginning of the year, and divide it by the number of months until we jet off.

2. New Car Fund

I currently drive a 2002 Yukon Denali. Even though “The White Rhino” is paid off, I still have a $400 car payment…to myself. So far, our car fund has about $20,000. When it’s time to upgrade, we’ll have the money to do it.

3. Christmas Fund

We used to panic every year when we realized Christmas was around the corner and we hadn’t saved anything. After Christmas, we’d brace ourselves for the dreaded credit card statement.

Now, our Christmas fund is ready by Black Friday. We’ll save $1,500 this year (a number based on last year’s spending), or $136 per month, to avoid the January hangover.

4. Insurance Fund

Often you can save around 10 percent on insurance premiums by making a one-time payment instead of 12 monthlies. We do this for our auto insurance, contributing $110 every month to our insurance fund before it’s time to pay.

5. Tax Fund

Getting a tax refund doesn’t make you a winner—it means you gave the government an interest-free loan. We adjust our withholdings to try and break even with the IRS, but it’s not a science. So we bank $1,000, or $83 per month, just in case we owe.

6. Home Improvement Fund

Unlike an emergency fund, which covers urgent expenses like a broken hot water heater or a roof leak, our home improvement fund is dedicated solely to wants. We’re currently saving for a $10,000 backyard makeover. We’re willing to wait two years, so we’re saving $416 per month.

7. Wedding Fund

Not our wedding (that’s done)—other people’s. One of my best friends from college is getting married in Palm Springs next March, and we’re assuming it’ll cost $1,500. We’re saving $125 a month till then.

8. Car Registration Fund

Depending on your home state and car value, registration fees can cost upwards of $1,000 a year. Ours is $600, so we transfer $50 per month to our registration fund.

9. New Tires Fund

Nobody likes spending money on tires, but you’ve got to do it. And it’s better if you’re prepared. We set aside $25 each month, which is enough to cover four new tires on both our vehicles every three to four years.

10. Whatever-We-Want Fund

This last account is a miscellaneous category I’m currently dedicating to fitness. Every year, I enter Crossfit competitions across Arizona and southern California. As much as I’d like to consider these vacations, Andrea thinks otherwise and suggested I open my own Crossfit fund and save $50 per month to cover fees, supplements and travel expenses associated with my hobby.

You Can Do This, Too

At first glance, we’re saving a lot every month—and that’s true. But the reality is everyone has expenses like these. We just choose to proactively pay them. We also have an above-average income and don’t have debt aside from our mortgage, which allows us to divert a high percentage of our income to savings.

Your financial picture doesn’t have to look like ours to try this approach, though. Start by writing down four or five goals and saving small amounts—even $50 per month toward one goal equals $600 after a year. It’ll be worth it when it comes time to write the check, board the plane or take the first step toward the business idea you’ve been thinking about for years.