Even though I am deep in debt, saving money is still a very important part of my financial plan. Now that I’m self-employed, it’s more important than ever that I stash money aside to prepare for all the unknowns in the world.
Not only that, but it’s important that I plan for all the things going on in my life. In the next year alone, I will be saving up for FinCon and Spain/Portugal.
Saving has always been a part of my adult life after I graduated college and became self-sufficient. I didn’t get my first credit card until a year ago, which meant that everything I bought had to be purchased with cash that was in my account. Nothing will inspire you to save like not having a credit card!
But for the longest time, I would just have all my money in one lump savings account. As long as it wasn’t in my checking, it was fine right? When I started to actually withdraw money for my goals, things started to get a little blurry. It was hard to keep the integrity of one savings goal, when it was jumbled with all the others in the same account.
Think of it this way. Let’s say you go to the grocery store to buy food for the week, but you also buy food for a special camping trip. If you don’t come home and separate what food is for the camping trip, you are likely to eat it along with the rest of the food.
By separating food (and funds), you are setting your intention and clearly marking its purpose.
Several years ago when I found out that Capital One 360 allowed multiple, targeted savings accounts, I was thrilled! I have been with Capital One 360 (formerly ING Direct) since 2007, so have been a long-term saver. But this added function has completely revolutionized the way I save!
From the screenshot, you can see I have multiple targeted savings accounts. One for Emergency Fund, Travel, Taxes, Spain, Contact Lenses, FinCon, and Credit Card Payments. Yes, you can create whatever savings account with whatever amount you need. The best part is you get to name them, which really solidifies the goal!
I love that there are no fees and no minimums. Bonus: you can even create a savings goal, which creates a nifty bar graph to show you your progress.
To make it easy, you can create an Automatic Savings Plan, that is linked to your checking account. I have all my savings accounts linked to my checking, and have automatic withdrawals throughout the month — even for as low as $20. Because everything helps!
More than anything I believe in the power of automation. I was able to save $14,000 before going to grad school because I automatically saved $600 a month. After a while, I didn’t even miss it. Heck, I didn’t even notice it. You better believe I was thrilled to have a decent cushion when I left my job and moved to NYC for grad school.
It’s because of automation that I haven’t had to deal with my own mental roadblocks that can so often get in the way of savings.
Can I afford this? Should I just save later? Oh, I’ll just wait a few days.
Do those thoughts sound familiar? Yeah, I’ve been there. But with automating, it’s just so easy. But if automation really isn’t your thing, you can transfer manually.
As 2015 approaches and you are planning your goals, consider targeted savings accounts. Separate the funds so that you know exactly what they are being used for. Trust me, it’s really easy to make excuses about why we can’t save. If all your money is lumped together, as soon as one thing pops up, you will use all that money on that specific thing and your goals go out the window.
Try a different approach! I’ve been so happy with Capital One 360 as a saver that a few years ago, I dumped CitiBank and opened a checking account with Capital One 360. At first it felt weird to dump a brick and mortar location for something that is only online. But they have made strides in their online app, which makes it easy to upload checks, and there are many ATMs in the area. I’ve also had nothing but good experiences the few times I’ve called their customer service line.
So if you are looking to overhaul your finances, try out targeted savings accounts. Also, if you are bombarded with overdraft or other types of fees, then try out Capital One 360’s checking account too. No fees and no minimums.
I currently get a .75% APY on my savings account and .20% APY on my checking, which brings in a few extra bucks a month. The extra money is nice!
Keep on saving my frugal, debt-fighting friends!
Note: I wasn’t paid to write about Capital One 360 (although if someone works there and wants to extend the opportunity, I’d be happy to 🙂 ). I truly believe that my finances have been a lot more organized because of targeted savings accounts. I also love that there are NO FEES and NO minimums. However, this is my referral link, so we will BOTH get a small bonus if you open up either a checking account, or a savings account with $250.
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37 comments
This is something I’ve been meaning to do on paper. We don’t save for much right now, but we have things like home and car maintenance that we set aside money each month until we need it. We are in the process of closing out our local accounts in favor of our Ally account. I’ll need to see if I can do this with them… Or add your bank to our mix too!!
I find it really helpful!
Sounds like a great system! I’ll admit I’m guilty of just saving all our cash lumped together in one account, but, it works pretty well for us. We don’t keep that much liquid (most is invested), so the urge to spend isn’t really there. But, I’m all about goal setting! Love that you’ve got specific goals tied to each amount!
Ahh, I wish I could be in your situation and have most of my assets invested. Well, someday 🙂 You are an inspiration. For now, the savings goals help me stay financially stable.
I consider targeted savings accounts all the time, but my brain doesn’t work that way for some reason. I do have a few savings accounts, but the money is not separated into different categories other than in my mind. I like your strategy though!
It’s not for everyone. My partner doesn’t like this way, but it really helps me!
Hi Melanie,
Great post! I currently have my savings account sitting in a brick and mortar building and it’s as old fashioned as it gets. No ATM, checking, or debit tied to this account. I wanted it to be out of sight, out of mind. With the Capital One 360 tied to your transaction account, do you ever feel like that savings is too available? Or does your drive to save for the target items prevent you from dipping into savings for other purchases? I’m curious to hear what your readers think of this as well.
C
Good question! First of all, I think your plan sounds solid. For me, I have no issue having my checking and savings account with the same bank. The targeted accounts with the fun names is a constant reminder of what they are there for, so I don’t touch them. I love seeing the progress bars too!
I love having this account and having various savings buckets. It’s away from my main checking/savings so the temptation is gone, but close enough that I can access it when I need to.
That sounds like a great plan!
I am a HUGE fan of the targeted savings accounts. I think everyone of my clients has at least 3 or 4 savings accounts set up because it helps them to focus on those specific goals. Without them, their goals remain just general goals and it’s hard to focus on general goals vs. specific ones.
Exactly! It’s too easy to lose sight of what each goal is.
I love Capital One 360 for this reason. A friend was trying to get me to switch to Ally for the free ATMs and checks, but the targeted savings accounts are so much more valuable to me.
I love Capital One 360! The first set of checks is free and I have plenty of AllPoint ATMs around me that have no fees. But I also don’t use checks or cash that often…
This is a great idea, Melanie. My husband says it’s not necessary to have different accounts. He says we can keep track on a spreadsheet. But since there is nothing to stop us from overstepping the spreadsheet “boundaries”, we overstep them regularly. Thanks for this!
You’re welcome! Glad it helped! 🙂
I used to bank with ING in Canada before Scotiabank bought them out. I loved the feature of having multiple savings accounts. I haven’t set that up here yet but we’re not saving up for too many things at the moment, except for a future home purchase. We opened up an Ally savings account for just that purpose.
Nice! I think the targeted savings accounts are so helpful. I’d love to hear about your journey saving for a house!
I have been considering opening Capital One 360 accounts for this very reason. We keep track of our savings goals on a spreadsheet but I think to have them in separate accounts would be better for us. Thank you Melanie for the great review! 🙂
I love it! Glad you enjoyed the review, Nichole! Hopefully it’s helpful to others.
I really want to open a bank account that allows multiple savings accounts next year. When we moved, I had to choose a brick and mortar because I needed to deposit the money (and didn’t want to mail a check to an online bank). But I don’t like having one lump sum – it makes it difficult to distinguish between goals, as you said, and on a psychological level, I have a harder time parting with the money. If it’s specifically earmarked for a goal, I think it’d be easier!
Yeah, you could have a Wedding fund, EF, Taxes, etc. It’s so nice! If you pursue it, let me know how it works out.
I really need to open an account with Capital One- I keep hearing great things. I think your post may have pushed me over the fence! I use my PayPal for savings, but I would love to have all of those separate savings goals right there to see. Very motivating.
Do it! No pressure 🙂 But it’s so helpful and the interest is nice 😉
I just opened a savings account with Capital One 360 and I’m loving it so far. I like that there’s no minimum balance required, a great interest rate and no hassle. I can finally see my money grow in a savings account for a change. I think I’m really going to start utilizing their targeted savings accounts. I am saving for a few different things and I get pretty confused when money is flying out of my account left and right and I can’t quite pinpoint where it’s going.
I love it, too! The targeted savings accounts are so nice. Thanks for stopping by! 🙂
Thanks for sharing this strategy, Melanie! I’ve been using a spreadsheet to save throughout the year for some of my larger expenses, however, it would be great for this to happen automatically.
Automation is the way to go!
Wow, I have a CapitalOne 360 account and had no idea about this! I’m even more excited because I’m planning to start saving for two new things in the new year and I really wanted to figure out a way to give each it’s own account without making everything super complicated.
Yay, glad I could share this info! I LOVE it.
I used to use Impulse Save which was bought out by Capital One 360 and was able to save a good amount for FinCon12 and towards a new iPad. It also really helped that I was able to deposit mileage checks and any other extra income I got my hands on. I think I will definitely move over some money into a Capital One 360 account!
Nice! Try it out, it’s been so helpful for me!
I use capital one 360 for my savings goals too (expect my EF, which is at my traditional bank where my checking account is also located). Love being able to label my accounts for different purposes.
Me too! It’s so awesome!
I freaking love Capital One 360! Having multiple savings accounts helps with keep my finances organized!
It’s so rad!
Nice article. Thank you