My Multiple Savings Accounts (and how to get your own)

In the past when I’ve mentioned my various savings categories (like our vacation savings, or our electricity savings), I’ve had a lot of readers ask how I keep all of this organized.

My secret is multiple savings accounts at ING Direct which is an online bank whose main claim to fame is their high-interest savings accounts. To open one, you need to have a checking account at a traditional brick and mortar bank. Your ING account will be linked to this checking account, and you’ll use it to transfer money in and out of your ING savings accounts. This is an easy process, but it usually takes a couple of days, which is kind of nice as it will prevent you from emptying your savings accounts on a whim.

I really can’t say enough fabulous things about ING. I’ve been their customer since September of 2001, and I’ll continue to be their customer as long as their doors are open (um, or as long as their website is open!). Their customer service is great, their interest rates are good, their website is easy to use, and (this is probably my favorite thing), they allow you to have many separate savings accounts.

A number of budgeting gurus advocate the envelope system where you have a paper envelope for each category in your budget, but since I don’t use cash for much of my spending, that doesn’t work particularly well for me. Other people manage their budget categories by maintaining a spreadsheet, but I have enough trouble keeping up with Quicken. I know I’d fall behind with a spreadsheet.

ING savings accounts are the perfect thing for me…they don’t require cash like the envelope system does, and I don’t have to stay on top of one more record-keeping task.

Here’s how I use my ING Savings accounts:

• I don’t have savings accounts for budget categories that are monthly and predictable. For instance, I know exactly how much our car insurance and mortgage will be each month, so I just pay those out of our checking account. There’s never a shortfall or an unexpectedly high bill for these expenses, so there’s no need for a savings account.

• I do use the savings accounts for budget categories that are less predictable or that come up at irregular times. Our electric budget category is a perfect example of this. We budget $200 a month to cover our electric bill. For a number of months each year, though, our bill is less than $200. When that happens, we pay the electric bill out of the $200 allotment and then put the rest into the electricity savings account. In the winter, when our bills are higher than $200 a month, we pay the $200 from our monthly budget and then cover the rest with money from the electricity savings account.

Expenses that come up once a year are easy to manage this way too. Each month we put money into a Christmas savings account and a vacation savings account, and words can’t express how lovely it is to have this money set aside when Christmas and vacation time roll around.

Other budget categories that work well for this type of account are home maintenance, clothing, and taxes (if you’re self-employed and pay quarterly estimated taxes).

If you already have a system that works well for you, you’ll probably want to stick with that, but if you’re like me and can’t seem to make the usual methods work, I’d heartily recommend giving ING a try.

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How do you keep track of your budget categories? Are you an envelope person, a spreadsheet fan, an ING fan like myself, or do you do something altogether different?

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