Previous: Francesca Ramsey opens up about the taboo topic of divorce & money in our latest ep of TFC
Next: was it "hard work" or was it "generational wealth"



View count:72,496
Last sync:2024-05-27 20:15
In this video, one person shares her competing savings goals, and how she approaches each differently — and keeps her money separate in order to plan for different purposes.

Through bi-weekly video essays, "Making It Work" showcases how *real* people have upgraded their personal or financial lives in some meaningful way. Making your life work for you doesn't mean getting rich just for the sake of it. It means making the most of what you have to build a life you love, both in your present and in your future. And while managing money is a crucial life skill for everyone, there's no one "right way" to go about it — you have to figure out what works best for *you,* full stop.

Video by Grace Lee

Based on an essay by Audrey Gonzalez

Join this channel to get access to perks:

The Financial Diet site:

[PAPERS SHUFFLING] I used to have just one account for savings, an emergency fund.

While that generally worked, I found myself raiding the account for irregular expenses and not all of them were true emergencies. Semi-yearly car insurance payments or repairs, taxes due, new furniture or toys, those all took me by surprise, even though they shouldn't have.

I eventually admitted that I was bad at keeping a buffer of extra money in my checking account and I needed to set aside money where I couldn't see it. Over the years, stable jobs and changing priorities meant that there were goals I wanted to reach beyond not panicking when my car insurance was due. These were big goals I would have to plan for, maybe even for years, like international travel or a house down payment.

Those desires drove me to open new accounts with separate goals and shift around my savings strategies. Right now, I have seven different savings accounts with an online bank. Account number one, emergency savings.

Priority, highest. Strategy, maintain at all costs. This is my safety net against the unpredictability of the world.

I've stashed away four months of expenses here based on my normal spending patterns, not my "holy shit I lost my job" spending patterns. And it is the absolute last place I draw from when I need extra cash. It is strictly for emergency emergencies and I'm lucky enough that I haven't had to touch it in over a year.

I'm not currently contributing to this account, though I have been thinking about trying to up this to six months of expenses. Whenever I have to draw from this account, all other transfers to savings are halted until the spent money has been restored. Account number two, adventure savings.

Priority, low. Strategy, drain and refill. My best friend and I take an international vacation every other year in place of one of our birthday visits.

In preparation for this, I've been banking money and vacation days for our next trip, the Osaka/Kyoto region of Japan. Right now, this account sits pretty at about 10% of my yearly salary. Even though my friend and I are coming in under budget for our trip, I imagine I'll still spend a good chunk of this money by the end of it.

Right now, I don't contribute any more to this account, but I'll need to devise a strategy for topping it back up once the trip is over, so I'll be ready for our next adventure. Account number three, car-related expenses. Priority, medium.

Strategy, build, but regularly tap. This is the account where I save for everything car-related except gas. Car insurance, registration, oil changes, overdue maintenance, all of those things come out of this account.

Like today, for example, when I paid $739 for all the things I just listed. I'm headed out on a road trip in the near future and would like to not be stranded in the desert. Thanks.

I am actively contributing to this account to the tune of $277 a month. Since I haven't had any true car-related disasters in a while, I have been accumulating and hope to continue accumulating a surplus. The goal is to one day use the surplus money to buy my next car in cash.

Account number four, house down payment goal. Priority, high. Strategy, build and build and build.

I'll be honest, I'm not even sure I want a house. And I am unwilling to raid my savings or retirement accounts for a down payment when I'm not certain I'll stay in my area. Still, I want to be positioned for the opportunity to buy someday.

And that means I need money for a down payment, closing costs, et cetera. I'm putting $300 a month into it for a slow, steady climb to $3,600 by the end of the year. The goal is to never touch this account until it's time to spend on a home or until a change in priorities means I need to use the money for something else.

Account number five, luxury spending. Priority, low. Strategy, toss in extra and wipe it out.

Computers grow obsolete. New toys appear on the marketplace. You get really tired of your fresh out of college aesthetic furniture.

I've got a list of big ticket items I want to buy eventually as upgrades to what I currently have, but there's no rush. I'm biding my time, waiting for the perfect version of those items to cross my path. And when they do, I'll buy them straight away, secure in the knowledge that I have this account to cover the expense.

I don't have a specific goal for this account, but I toss in money whenever I have some cash left over at the end of the month. One day, I'll find a dresser I love at the price I'm willing to pay, damn it. Account number six, holiday savings.

Priority, medium. Strategy, drain and refill. The spreadsheet I used last year to track my Christmas gift giving spanned 7 columns and 37 rows.

I have a huge family and several friends scattered across the globe. And it's important to me that I give them all presents if I'm able. There are also always miscellaneous holiday or charity events either at work or in my community that I like to participate in without any financial stress.

In years where I lived in a different state than my family, I also used this fund to pay for plane tickets to visit. To that end, I currently set aside $80 a month throughout the year and intend to bleed the account dry in December. If money is tight in a given month though, this is the contribution I skip first, which I have already done this year.

This account lets me enjoy an extravagant and generous holiday season without waking up with a credit card hangover in January. Account number seven, saving for taxes. Priority, low.

Strategy, drain and refill. Taxes come like clockwork every February and I never get a refund. I often had to reach for my emergency savings or contribute less to other financial goals the month I filed and it was always frustrating.

I got fed up with it last year and opened this account specifically to cover any taxes owed. While I still didn't save quite enough for my last year taxes, I was able to cover more than half of what was due on this account. This year, I'm earmarking an even higher percentage of my freelance pay, which is irregular and variable, for this purpose.

Maybe I'll get the math right this time. Looking at the infrequent but high cost expenses that popped up in my life repeatedly it was a great way to decide what kind of short and mid-term savings accounts I should open. Lifestyle priorities, like holiday spending and travel, prompted me to open even more.

Seven feels like the perfect number of savings accounts for me right now. But who's to say that's all I'll need in the future?