Why I Have 7 Savings Accounts

In an effort to not overwhelm my budget every month, I have set up seven (yes, seven) savings accounts. I lovingly refer to these accounts as my sinking funds, and they quickly became my pride and joy (aside from my children of course).

jar for change

A Sinking fund is where you set money aside for expenses that you know will be coming up, those expenses that would feel like an emergency if you didn’t have anything set aside. Sinking funds allow you to save in smaller, monthly installments so that when the time comes you are prepared with money in the bank (think Christmas or those pesky car repairs).

What should you be setting aside money for?

Think about those larger expenses or special occasions that come up once a year that you wouldn’t likely be able to pay for in one individual month without going into debt. Your sinking funds can also include expenses that you know, eventually will happen.

saving for future needs

Our sinking funds include:

  • Car Maintenance
  • Home Maintenance
  • Christmas/Holiday
  • Taxes (my husband is self-employed)
  • Medical Expenses
  • Car Replacement
  • Other yearly fees

How much should you set aside each month?

Luckily this does not involve math that is too complicated. No fancy formulas required. All you simply have to do is consider how much you would like to spend and divide that by the number of months you are going to save up for.

My husband and I decided that we would like our total budget for Christmas to be $1200. That means that since January, I have been setting aside $100 into my Christmas sinking fund.

For something like Car Maintenance, take a look at what you spent on oil changes and repairs last year, divide that number by 12, and that will tell you what you should consider setting aside each month.

If your car is nearing the end of it’s life expectancy, setting aside money into a separate account will give you the ability to pay for that next car with cash. First consider how much you would like to spend on your next vehicle and divide that number by the number of months that you will be saving for. Instead of paying the bank or loan company car payments, plan ahead and pay yourself a car payment. Not only will you be avoiding debt when you have the money in hand, but you’ll be earning interest while you save rather than paying interest if you finance.

There are many ways that you can track the amount you are saving. One method would be to set the money into one savings account and then use a spreadsheet to track how much in that is set aside for each fund. The other option you have is to look into No Fee Online savings accounts where you can easily name and keep track of your sinking funds.

When looking for your savings accounts, you want to be sure that they are no fee. Be sure to avoid those banks that charge you a fee for withdrawing your money from your savings account. The other thing to be on the lookout for are the interest rates that your money will earn while it is in savings. Although the interest will not make you rich from these accounts, you want to look for the most competitive interest rate you can find.

How ever you decide to set aside your savings, you’ll feel great knowing that you’ll be prepared with money in the bank. The holiday season is so much more enjoyable when you know that it’s been paid for with cash.

Your Turn!

  • What are some big-ticket and not-so-big-ticket stuff that you are setting some money aside for?


  1. I do this, though not to the extent right now that the author does. It really does help to have cash on hand designated for specific needs. I plan to expand the practice in the future. Thanks for a valuable article!

  2. I do this! I use Ally.com. I have 3 right now – Taxes (self-employed), rainy day, tiny house. I’ve thought about breaking up the ‘rainy day’ account into more specific ones like you have – car, christmas, etc.

  3. If you use a zero-based (envelope based) budgeting application, it’s likely that you can setup a category/envelope for tracking these expenses without needing additional savings accounts.

  4. I am impressed by your discipline. Really worthy of imitation. Thanks for sharing.

  5. I do the option of having a spreadsheet and putting it all into one savings account but this method takes discipline to keep the spreadsheet updated and accurate!

    Also I have found that paying for things in cash feels so much better than putting it on the visa or borrowing. Especially holidays! It makes it feel like you won the holiday and you can enjoy it totally guilt free.

  6. Yes! We have multiple savings accounts too!

    Here is our breakdown:
    – Home Maintenance
    – Car Savings (Maintenance and eventually a new car whenever one of ours tanks)
    – Emergency Fund
    – Charity Fund
    – Investment Fund

    We also stockpile our “Amazon Cash” back points from Amazon credit card purchases for Christmas gifts… so while not a savings account per se, I consider it a pseudo-savings 😉

  7. You don’t need 7 accounts to achieve your goal. It’s acutally harder to do it your way than using basic accounting techniques. Using paper or a spreadsheet to record the distribution of funds among many categories allows one to keep deposits in a single, more easily managed account. Your information on the amounts available per category are stored in your ledger along with your total balance. I’d hate to have to find out the individual totals using your system. It falls apart very quickly when adding more categories.

  8. Putting aside money for specific reasons can encourage you to save more.You are more motivated to save money for a travel fund rather than a plain savings account. Also, it is much easier to visualize your progress when you have individual savings accounts rather than a single combined account. The only drawback may be that smaller amounts may not always qualify for the highest savings account rates.

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