Sunday, March 21, 2010
Funding ten hungry savings accounts
I have many goals in my financial life including saving for a newer used car, saving for a future farm in the country, saving for charitable donations and saving for life's unexpected events. This requires various levels of funding, all of which are important. How the heck do I deal with the demands of ten different accounts?
Well, each account is for a different purpose.
1 and 2. General savings: This funds emergency spending overages even if the fault is only mine, large veterinary bills, larger-than-expected car repairs, maintenance and upgrades to the house, or any other unexpected event that required money. This is funded in three different ways: a savings account at my credit union, three CDs at my credit union and a savings account with Emigrant Direct. I allocate money every pay period to add to the savings account and when it gets large enough, either fund a CD or transfer it to the online Emigrant Direct account.
3. House savings: This funds my basic home needs including gardening supplies, outdoor appliances (e.g., lawnmower), tools and low-cost house maintenance and repair (e.g., paint or energy assessment). Any costs over and above this account will draw from my general savings account. I fund this account with an automatic transfer each pay period.
4. Gasoline hedge fund: This fund is for money leftover in my gasoline spending allocation that is subsquently split between this account and my car savings account. Rather than worrying about increasing my spending allocation as gasoline prices go up, I can use the money saved in this account to supplement my spending allocation until the price per gallon goes down far enough the spending plan covers it.
5. Car savings account: This fund is solely for buying a newer car. My current vehicle is running well, but I would rather have money and possibly avoid a car payment than be caught without a plan. My car has 136,000 miles on it and is 13 years old. It has some time left on it (my goal is to reach at least 150,000 miles) but I allocate money each paycheck and each month add to the funding with half of the remaining amount in the gasoline spending as well as odd bits of money here and there from rebates and small bonuses.
6. Charity savings: This fund is for any charitable giving. It is much easier for me to give spontaneously if I know I have x amount in my charity savings account. I am able to fund three charities regularly and still have extras for unexpected giving. I save a small amount each month and sporatically add money in small amounts.
7. Car mainentance: The money in this account solely arises from extras in my spending plan. When I had over $200 available from not spending anything, I decided to open a savings account to earn a bit of interest. This is the first line of defense against car repair expenses and hopefully will mitigate any demand on my regular savings.
8. Found money: This is a catch-all fund. I have purchased a chest freezer and partially funded a new computer purchase with money from this account. The current goal for this account is a potential vacation later this year. Funding comes once a month and looks to be on target with the $700 goal I set.
9. Utilities fun: This is also an account funded by leftovers from my spending plan. This collects money from my natural gas and electric/water utilities if I spend less than I allocate. Winter I typically use the full amount I allow in my spending plan and even had to use some of the money in this account twice. Like the gasoline hedge fund, this account holds money I can apply to any unexpected utility expenses.
10. Future farm: This fund is for the farm in the country I would like to find and buy. This goal is two years away so I wish I could save more. However, I allocate money monthly and have been sending more irregular income (refunds, temp job money) to this account. I would like to save more as I suspect my needs will be great in this area, but so far have done well for being one of many goals I am funding at my current income level.
The main drawback to so many accounts is having multiple demands on a finite amount of money whether it is my regular or sporatic bonus income. Balancing all of them is a delicate act, but I manage to see positive growth in all of them. My main concern is the farm savings account and what I can do to increase the amount in there. This may mean a second job where the money will only go to the single account.
Do you have any thoughts on my strategy?