This has worked for me for sure! I've set up one main sinking fund savings account and keep a spreadsheet of the different categories. Mine are unexpected car and health expenses, gifts for holidays and birthdays, a travel fund, a household fund (so things like new kitchen items, upgrades to furniture, storage, etc.), unexpected pet expenses, and fun $ I didn't budget out of my paycheck. I definitely put less in mine per month than this person, but a little goes a long way. I also have emergency fund that I pad more heavily than these funds just bc I like the security. Just some encouragement for those who can't put a lot into a savings each month - I'm there with you! Save what you can or feel comfortable with and don't compare to others. You're doing great.
@Jasmince3607, so true! I follow another financial RU-vidr called "The Budget Mom" & she make these fun/cool saving challenge worksheet. I'm currently doing one: a saving challenge of putting away $25 per week with goal of saving $700. Half $700 saved will into long term savings account, the other extra B-Day $$ for this upcoming May 2023. A little definitely does along!! Everyone has their own journey toward being financial wholeness
This is one of the most useful videos on this channel to date. I've been trying to keep separate saving accounts too, but I have a hard time keeping them all straight or prioritize them. This video really helps, especially with the priority and strategy for each category.
Do you already have some specific goals for your future and for your money? That really helps as well, that's where you're gonna find motivation to keep saving and saving
I just switched to Wealthfront because you can break your money super easily into separate saving buckets, which helps my brain. If you can find a service with something similar it might helps. Plus it gives you access to a debit card if you need to pull directly from it to pay for things, though I stick with my using it to pay back purchases from my credit card for purchase protection and rewards.
Many banks let you nickname accounts, which may be helpful for you. I also have been using Spendee (an app) that let's you track all your accounts in one spot. The lifetime membership was like $50 but if you want free apps, Mint and Personal Capital are ok. Spendee just has a better visual, and they connected to more online banks than the others did.
Hi- You are right this is a pretty good video but the priorities are what she is prioritizing for her, I would recommend using the Eisenhower Matrix and to pick your priorities and rate them for your own. Best of luck with your saving goals 🙂
I think this is an interesting albeit slightly overdone premise. I totally understand what you're saying and I think a lot of people, espcially if they're single income, could relate. On lower income, a set up like this is only really manageable if you're putting like $20 in each account, knowing (somehow) that you won't need to dip into it for years. It's not practical.
I don’t know anything about your circumstance, but I have seen many low income budgeters that has more saving accounts because they are low income. Like say if you make more money, a new shirt is just something you buy on a whim, but a lot of those people would have separate clothing, entertainment (movies or local trips), home repairs, birthday, and many other saving accounts. Though I totally get that a lot of her accounts would not be so applicable. I make quite a bit but live in NYC, I can’t fathom how I can save 300k for a downpayment on a 1mil apartment. 😢 At this point it isn’t even if you are low income.
Hi- I can say that there are quite a few who would say the same and the best approach in this situation is to first make the budget where you cover your must covered bills and from there whatever is left over is to divide it into percentages instead of a set amount if your income fluctuates.
I love this idea with Ally, but for anyone who comes across this please note that Ally has recently (as in, August of this year) come under fire for security breaches/a cyberattack in relation to their debit/checking accounts. Many Ally customers reported fraudulent charges connected to their checking accounts and debit cards, some of which had never been activated. Although this security concern did not affect savings accounts, please go in with your eyes open to the risk. Some alternatives to Ally with similar high APYs and the ability to bucket are Discover and Capital One (although the buckets are technically filed as separate accounts with different account numbers, they’re grouped under one ID/Password/Login with the bank, so there’s still a level of ease and interconnectedness)
@@tayasullivan1909 Are the buckets with discover separate accounts too? I couldn’t tell if you were talking about just capital one or both capital one and discover!
I also have multiple accounts. If you are poor at managing money, then I also highly recommend splitting accounts. Here is how I learnt to manage my accounts. 1.Mother ship - this is where all of your income comes in and all of your necessary expenses and automatic debits come out (insurance, subscriptions, debt) and what will get budgeted. This account has roughly the same amount of income and debits each month that need to be accounted for. With the remainder of your income after your necessary debits, I would then budget the rest into various other accounts. 2. Household account - this is where your rent/mortgage payments and all other household expenses should be managed. Only rent/mortgage payments, internet, insurance, repairs or household maintenance should be budgeted in here with a small buffer (you don't need too much extra here, as you already have an emergency fund in case you can't make rent for whatever reason :) ) 3. Groceries - yep actually this is a great idea if you are splitting expenses with a share house or a partner, that way it can be managed how much each person pays in and remains fair. If you only have €100 per week then you put €400 for the month in and can manage it fairly easily. However, even for a single household, this is a nice account to have, so that you know you can always eat at home, even when money is tight, you have some cash left for groceries. 3. Future fund - the 'vault'. Hard to access but not impossible. This is money that you can't touch unless it is a real emergency, and should have barriers to access (for example you can only go into a bank to access these funds) and is aimed at long term savings over a number of years (almost like a pension plan or 401k). This should build over time and ideally be invested or managed externally). 4. Emergency funds - barriers to access but still available in a true emergency. 3-6 months worth of living expenses! 5. Back-up fund - this is a savings account for spill-over expenses that aren't long term or emergency, but might put your budget out if not account for, like car insurance, taxes etc. Ideally this is an account for irregular expenses, maybe once a year, and should always have at least €1000-€2000 at all times and kept updated to cover upcoming larger expenses. 6. General savings - this is an extra account for those who like to save for specific things like a holiday, wedding or house. This of course very goal orientated and would be a logical account to have once you have set up the others. 7. FUN account - any left over money can go here and is for all other expenses - this is a NON guilt spending account or slush fund. Here you should add as much as you need to cover your fun activities - like eating out, concerts, travel, shopping or any other expenses :) I'd say these are listed in importance. But again, having a fun account is definitely a priority if you enjoy..well...living...and not just planning for an indefinite future :)
For me, it all depends on the lifestyle. If you live a simple lifestyle, I don't think you need to open several savings accounts. But I do understand what you meant. Organizing yourself and your money is everything and I really value that.
My current strategy for accounts is only having 3: 1. Bills (Checking) 2. Fun Money (Checking, separate bank) 3. Emergency Fund (savings, same bank as Bills) I used to have 10 savings accounts myself (before Ally came out with buckets, and before I switched back to Chase because of their autosave features) but it would spread each too thin.
I feel like the Xmas acct should really be a "gift giving" account bc the same ppl you have to give presents to on Xmas are often the same ppl u buy birthday presents for, plus specialized holidays like Mother's Day, Father's Day, etc. So if your gifts avg $30/person and you have 10 ppl to get Xmas gifts for and you buy them bday gifts too (and treat/cook them a bday meal), your annual expenses for them is really $600 minimum instead of $300. If you can absorb the $30/person for bdays throughout the year, then maybe you don't need to budget for bdays in this acct. In my case though, I have 4 ppl that have bdays within 3 weeks of each other, so it's like half an Xmas budget for me.
I'm definitely a "one account for presents and one account for Christmas" person! :) For me I am often a lot more generous on Christmas than I am on birthdays and other occasions throughout the year, as there are many more people who make the Christmas list (work colleagues, service people, neighbours) who I wouldn't necessarily get birthday or "just because" presents for. Christmas money can also cover expenses like Christmas work parties, decorations, holiday travel and so on - whereas (usually) there isn't as much additional stuff to think about when you're celebrating one friend's birthday or one family member's birthday. I think both strategies work absolutely fine - it just depends on your own lifestyle, and what feels worth it for you to save towards. :)
This video is one of the most useful Making It Work videos that TFD has posted. While it's very specific to this person, the framework she lays out for each account's priority and use/refill strategy is incredibly applicable to other people and situations. Thank you!
I tried it, but I didn't like it bc the buckets aren't visible on your page immediately when viewing your accts (at least w my bank). Also, separate accts allows u to make automatic transfers in different frequencies and amounts based on different types of priorities. I prefer having distinct accts, but realize the buckets are more practical if someone doesn't want to or can't meet multiple savings acct minimums. I think it also depends on your needs, how you think, and what stage you are in life. When I was younger, I only needed 1 savings acct, but as I got older, my expenses, bills, and savings goals changed (saving for a game console vs. a vacation vs. a car vs. a house vs. retirement), more savings accts became more important to separate the numbers.
This has been the most helpful video! I learned that having one chequing and one savings account wasn't working for me. I opened up 6 savings accounts and noticed my bank lets you name the accounts and set up auto transactions on payday, so I don't have to.
I do very similar. I also save all of my annual bills the year before so the interest becomes like getting cashback on those bills. Slowly working on building a year’s worth of monthly bills too so I can do the same thing.
I recommend creating an annual budget to plan for your savings each year. It especially helps you plan for irregular expenses. One Big Happy Life has a free template for this.
This is great - I used to be set with just one checking and one savings. That no longer works for me so I’ve opened a few new savings accounts like you did. I’ve got my emergency fund with about a year of living expenses, a rainy day fund (that stays at around $500 for one-offs), a sinking fund for upcoming travel, and one to stash 30% of my freelance income for taxes. It’s been super helpful.
I had to do the same thing too (4 different accounts at an online bank) and once I hit a 5 month limit with my emergency, I cut it down to $50 a pay check, so that money is still filling it while I have money to do short term and long term savings.
I loved this video! I usually end up saving too late in the year for Christmas, so I have to cut out a few people. I like the idea of monthly Christmas savings!
You should also try planning out your gifts before Christmas season. I have a notes tab on my phone full of gift ideas for friends and family that I update throughout the year and budget accordingly. I update it typically if someone brings up something they’d like in conversation or something I think they need/would enjoy based on observations. In the beginning of December I check back in with them and my savings account to see if I can get them something they wanted.
Always used this logic. Prioritising debt first over savings is important too. But always have a few savings accounts to fall back on as you just can't predict the future. For me it's job loss, I love my job but its always best to prepare for the worst especially as the UK is in a recession now. So I'm working towards 3 months emergency savings while also having savings for unexpected issues - house/car maintenance. The last pot is 'travel/fun'. Why work your whole life if you don't money aside to have guilt free fun. I don't have kids, so I'm sure if I ever do, my priorities will change! But for now, it's save save save!
The logic behind the approach to having so many savings accounts makes sense. 7 might seem overkill for some however I can see that using the same logic applied in determining accounts in this video could be tailored to anyone.
It's really eye-opening to hear budget advice from someone rich enough to save more each month than most people make. Saving is easy, as long as you start high enough on the ladder that you can't even see the bottom!
I think it's also about mindset. I managed to pay off debt and still have an emergency fund. If you read Dave Ramsey's book on baby steps - it gives you tips on how to start with just a very small amount. He suggest starting with small goals like make sure you have your first $1000 in savings. That could mean saving $100 per month or $10 per month, whatever you can afford, but it is doable. If you don't have enough income, try to incease your income by working more or smarter, like diversifying your income (sell some clothes online, do some pet sitting, teach some online courses...etc) Everyone has extra skills they can market :) I think anyone can do it. Of course this is relying on the ability for you to be able to work.
I utilize this practice and have a accts for buying a home, car repairs, moving expenses (in case I want to) and an emergency fund. My home buying fund is auto-drafred from paycheck. The others I have to login and add to them. I can only afford $20-25 per pay period per acct because--1) I don't live with anyone and I pay for everything and 2) rent is insanely expensive. I'm with an online bank as well..but not Ally. I do receive a tax refund (but may be less this year for everyone I hear) and typically spread it across all accounts, keeping a little for myself to treat myself. I may use this year's to start adventure & gifting accounts in 2023. I too sometimes worry I'm not saving enough each month, but I do what I can do and don't worry about it. Happy savings journey to all!
No don't worry, it sounds like you are doing an amazing job with what you have! Keep going and I'm sure you will be surprised at how much you have saved over time :) and once you are in a better position, you can start contributing larger amounts once you feel ready. You're doing great! :)
This is helpful, there was a time I couldn't afford savings but when you're able to it's a great way of keeping expenses manageable. Although I assume most of these are free access, some savings don't allow you to withdraw
Yup, I'm the same. I have a bunch of different accounts. At the moment 2 of them are goal based- I've nearly saved £1000 ahead of a holiday in January, and I'm nearly at £2000 which is going towards my wedding. My income has been quite variable so I don't have automated savings. Some months I put into my LISA which is a government backed investment account that gets matched 25% up to £1000 free a year, but it can only be used to buy your first home or pay for retirement. I can't afford to pay into this account every month as there is a minimum deposit, but I do top it up when I can.
I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made. Great video! Thanks for sharing! Very inspiring! I love this,,
Not quite long I started investing. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated
I've used pots in my current account in this way plus an investment account and another current account, but realised the money wasn't doing anything useful just sitting there. This year I'm going to pay regularly into a high (ish) interest savings account to build up proper emergency savings so that I don't have to raid my little growing investments like last year. It's tough on a tight wage though. Easy to end up feeling like, if you're diversifying your savings appropriately, there's very little to actually divide between them. My plan this year is: £217/m emergency savings (to pick up 2.9% interest over the year) £330/m investments (part of this is from a daily £5 automated transfer) Anything left at the end of the month, and any little bits of cash I pick up (selling something on ebay or doing surveys) goes into my Travel fund And keep my whole salary in a separate pot in the current account so I have to intentionally withdraw from it to use it or go into my overdraft. This worked well for me last year and enabled me to put varying amounts of money away at the end of the month. Let's see if the plan is sustainable....
One of these videos I can finally relate to! I save very similarly, although in much smaller amounts. I have a banking app that allows you to create "sections" in the account, so it acts as though you have lots of little piggy banks but it's all in one place. Christmas fund, clothing splurges, saving for specific big ticket items - I do all that stuff in there. So happy to know that one of my financial strategies is right for a change!
yes i do something similar like this also. I tend to overspend whenever i see 'extra' money in my bank. I had to separate money into few account, for auto debit (i.e. medical card insurance, subscription), for investment DCA, and so on
I've been using a similar system, for years. Mine is the tin can savings plan. I found I had to allot more, to my auto fund, since the increase in gas prices.
I was not surprised that there wasn't an account for medical expenses. Even if you have a solid health insurance program, the out-of-pocket costs can cripple you with one emergency. I suggest savings of the deductible plus 50%. It has to be liquid, and you need to know your insurance plan inside and out. Really. Ignorance is the most expensive thing you will ever pay for.
She’s from the UK. They don’t need to set aside money (and fear bankruptcy) for medical costs. Ahhh, not to live in America and have money to spend on life.
Mindful Tip in light of USA banking situations: don't keep money in only one bank. And don't leo all money in a bank. Keep some cash on hand at all times.
Americans who work for a single organization have this, handled via the payroll department. But those who are self employed, free lance, or contract work do not have the taxes deducted automatically, as they are also responsible for the business taxes before they pay their own salary. That work is also fluid and they often do not know what their final income tax bracket will be until the end of the year.
@@cornellcornell1 hey, i think OP was probably in the same way of thinking as me; a lot of US media/drama had characters in a state doing their taxes for example, it's not always clear thats the set up. But flip out on someone trying to understand something sure, that's a really good way to educate 🤠
@@_sootyfoot Even those of us who do have payroll deduction have to sit down and process our taxes in spring, to apply for a refund if the payroll deduction was incorrect (it's often a best guess) or to figure out if there was anything owed. My federal tax deduction is frequently spot on, but my state tax deduction is usually off by a few hundred that I have to pay back.
This administration is putting so many families into difficult situations A lot of people are financially struggling to live , keep a roof over their heads and put food on the table , Anyone who is not investing now is missing a tremendous opportunity imagine I invested $ 1000 with a lady you recommended some time ago and got profits of $ 4,380 You've changed my whole life, Thanks so much Mrs Debbie Stover
If interest rates are getting better, doesn't seperating the funds into piles lead to a lower returns? If the money is going to be sitting an undetermained length of time, wouldn't you see better growth if it was all kept together? You could simply pie chart the entire balance into the sections ypu've listed.
Unless the interest rates are different in each account, splitting it up won't matter. You can test this yourself in a compound interest calculator. Two sets of $1000, each in a bucket earning 2% savings a year, will lead to 1218.99 each in ten years, a total interest earnings of $437.98. One set of $2000 in the same account at 2% interest for 10 years..... will earn functionally the same amount of interest, $437.99. A whole one penny difference, a rounding error.
In the UK you often get the best rates on regular savings accounts that have a monthly limit on what you can save, multiple accounts are necessary to get the best returns
Most savings accounts aren't even over 1% nowadays, so savings accounts basically serve as simple storage. Growth would be negligible whether together or not. There are some high yield savings accts, but those have super high minimums. If someone is in the mood for investing, they would likely be better putting that money into a different financial instrument(s) (CDs, bonds, retirement, stocks, etc.) And as someone else said, if the rates are the same, whether the rates are high or low, having multiple accounts would not change the growth.
I only got two, I put the down payment and emergency funds in one that I never touch, the other is to save for fun money like vacation, holidays and luxury items.
You don’t say WHERE these accounts are. Are they in banks , earning absolutely no interest or are they in a high yield savings account where they can potentially earn you a bit of money? Yes, that makes a BIG difference! Your house account could be earning a lot of money over the years since you don’t plan on using it for a long time. While your goal(s) are admirable, your road to get there leaves a bit to be desired.
This is why I love my ally account! My savings account has buckets, so I don’t have to open up new savings accounts just to start one. I have my emergency fund with a different bank (synchrony) and all my easily liquid savings go into ally (plus the interest on it isn’t bad which is a bonus!)
It depends. If you want to buy in the next 1-3 years it's safer in an HYSA. If buying a home is way off in the future you could invest it but that does come with some risk.
Wouldn't you be losing money having all that money doing nothing? I'm talking about inflation rate and stuff like that. I'm scare of building an emergency found bc, at least in my country, $100 won't buy me next year the same amount of stuff that can buy me today
I think the general advice is to keep savings liquid. Having them invested means that it will be harder to take that money out if you need it. It also means that there is more risk - investments don't always pay off
Liquid cash savings will always be subject to inflation risk. I dont think this video is meant to address that but im certain this person also gas investments to combat the inflation risk her sav8ngs accounts suffer. Again, though, i dont think this video's purview lies in that realm
I think it depends on your age. I’m very lucky that I make quite a bit as a 23 year old and have my parents to depend on if all hell breaks loose. I only put my rent money for the rest of my lease (that is still unfortunately like 20k) away in a savings account, 401k is invested in funds, the rest in a combination of ETFs and stock market. Since I am young, I know I am ok with loosing more money and taking more risk. I basically say to myself anything in savings is ‘worth’ 100% of value, funds is ‘worth’ 70%, and stocks is 50%. Then I save based on the ‘worth’. This way I would be more resilient to market movements.
the problem is that for example right now inflation is high and markets are also quite volatile, you could lose more money by needing to withdraw it at a time when the market is down than by leaving it in a low yield savings account. i don't know where you leave but in my country the highest interest rate for a regular savings account is 4%, which is usually good but doesn't even begin to cover the current inflation. still, i wouldn't put my emergency savings anywhere more volatile. riskier investments should really be mostly for the middle to long term imo, not money that you'd absolutely need to withdraw asap
She’s from the UK. They have a National Healthcare System. Ahhh, to not live in America and be able to enjoy life and not stress over going bankrupt over a hospital bill.
that sounds very complicated. I would rather advise her to see a large sum in her normal bank account as "zero ". For example, if she needs $5,000 for Christmas, the car and taxes together (I think that was December to February) then she should never go below $5,000. the goal should be to have $10,000 on it so that after those expenses it's back to zero.
This strategy makes little sense to me. Instead of doing a budget for one account you try to maintain eight (checking and the 7 saving accounts). How is that easier than just putting whatever is left over after expenses into one savings account? 80 bucks a months for gifts seems like a lot to me. A lot of consumption for consumption's sake. I honestly struggle to even get people gifts because all the adults in my life already have anything they need/want.
Are these all same bank at same interest rate? E.g. the Marcus Goldmam Sachs 3% you can only withdraw from it 6 times a statement period but I wouldn't need to more than twice.. 3% no fees. This is where I think I should put my new roof, new wafer heaters, new furnace budget. For long term "savings I have been using Ibonds. Money I definitely will not need for at least 6 months. My indexed money market savings pays 0.1% or less and I have been stupid keeping money there. Finally buying cash for a car is not always the best idea. I paid 0% down on my car loan -BUT it was a 0% 4-year loan. I doubt those exist anymore. In contrast my student loans are as high as 7%. If you can buy the car at 4% and have a 7% student loan... or put another way if you can get 9% on an IBond and a 6% rate on your car with no prepayment penalty. Ibond still wins. YMMV. CDs in my lifetime have always paid terribly. 1% extra to lock the money away for 5 years. But once inflation is under control they might get competitive. Maybe.
Oh and don't save money in a money back account! My chase amazon credit card number was stolen. They opened an amazon account and could use my amazon points! (They never had access to my Amazon account). They were able to charge the card again AFTER I froze it. You do not get that money back. I lost $350. Now I spend it every chance I get. Also I am really getting tired of Fashion Nova ads. All because that's another place they used my card...
This is bogus... 1.emergency account. Put 1k at all cost as soon as you can. Then build it up to 3 months of salary. 2.sinking fund. Should cover the bills that come around once a year, festivities and birthdays. That money is preallocated and will be gone by the end of the year. 3. Savings for that one main goal (house purchase? Kids college? New car?) 4.fun fund ONLY if you can afford (meaning what's left after you've invested 15% of your income for retirement). For travel and other fun or non essential purchase.
The fun thing about personal finance is it's personal...not one size fits all. If you're happy with your strategy, do that. This isn't about telling you what you must do, it's giving real life examples so people get an idea what they want to do for themselves.
Multiple accounts has been the best for me. So imagine when I got to one of the oldest firms in the world and they only allowed direct deposit to one account.
