Plan Your Short-term Goals with Savings Sub Accounts
With interest rates so low in high-yield savings accounts, it doesn’t always seem like that’s the best place to put too much cash these days. Still, having sub-accounts in a high-yield savings account is still a good idea for saving for these short-term goals. Your main high-yield savings account is likely your emergency fund. In addition to your emergency fund, create other sub-accounts for other goals you have coming up in the next 2 ½ to 3 years.
I like having separate accounts for a number of my goals because it allows me to save for something very specific. Every time I make a contribution to my travel sub-account, it energizes me thinking about where I’ll go and what I’ll do. Something admittedly less fun is my home improvement sub-account. Absolutely needed for setting aside funds for repairs–either improvement I know I’m planning on or even just to have funds available for something unexpected. Part of the joys of homeownership!
My last sub-account is my Splurge account. I talked about my need for a Splurge account in my article, The Unintentional Splurge (And What To Do Next). Having just a couple hundred or a couple of thousand dollars in a splurge account allows me to take advantage of a cheap flight, a deal on a case of wine, or can’t miss concert tickets without blowing up my budget or dipping into my investments. We’re in a low-interest-rate environment right now and eventually, it will get higher. The important part is really the discipline of saving for your goals. Also, having the funds available when you want it. Separating out your goals into sub-accounts just helps remind you of the reason why you’re saving!