I was talking with a friend the other day, and she was telling me about some big expenses she and her husband had coming up. They had all the money they needed saved in their sinking fund…with extra to spare. But she was having trouble pulling the money out of the account. What if she needed it for something else? How would they build their savings back up in time to reach another goal? This highlighted for me a few of the many reasons it is smart to have multiple savings accounts.
Multiple Accounts Help Give Every Dollar a Purpose
We often hear about giving every dollar a purpose when it comes to creating our spending plan each month. I think giving every dollar a purpose is just as important when saving. By opening multiple savings accounts, one for each of your major goals, you are assigning each dollar in savings a purpose.
With multiple savings account, the purpose of each dollar is clear. The money you save in your emergency fund is designated for emergencies only. You know exactly what you have should you ever need it. But you can also clearly see how much you have towards your next vacation, your future home remodel, or even Christmas presents. This helps alleviate the worry of “what if I need the funds for something else.” The money is clearly labeled. You know exactly what you have for each need or want.
Having Multiple Savings Accounts Helps Keep You Focused
When I was younger, I only had one savings account. Any money I