Every two weeks you get a paycheque. You know you have certain bills that are coming up or certain things that need to be paid in the near future. So, you need to put that money away somewhere safe so it can be saved, and not spent until you use it. You don’t need to put it into long-term savings accounts like a TSFA or RRSP, but more of a short-term savings account. Most people have one short-term savings account for these funds, but, if you’re like me, I tend to forget what money is for which upcoming bill. In order to combat this, I write down what amount I deposit, the date, and the bill the deposit will be for so I can keep track. It came to a point where this was a lot of financial tracking. After a while of doing this, I figured out a way better way of keeping track of my short-term savings account and the money that was in it!
Having multiple short-term savings accounts for different purposes can solve the problem of keeping track of funds.
Most financial institutions offer low-cost (or free, depending on the amount of money you will consistently have in that account, if you are a loyal customer, etc) savings accounts. We have many of these. Each one is labelled for whatever the money is allotted for. It also helps you to categorize your savings. Here are some examples of short-term savings account titles that we have:
- Property taxes
- House/car insurance
- Extracurricular activities (sports, camp, etc)
(We even have short-term savings accounts for holiday gifts and upcoming vacations!)
There are financial institutions that do not have many (or any) brick and mortar locations that offer what I call inaccessible banks accounts. With these types of financial institutions, you are able to transfer your funds from your bank to accounts with them. Due to the fact that they don’t have many (if any) actual locations you can visit, their interest rates are usually better. The benefit of banks like this is that the funds aren’t as easily accessible. You cannot easily go to an ATM and withdraw money from these savings accounts. Also, it takes a day or two for the funds to transfer from there, to your bank. This makes it harder for you to use that ‘spoken-for’ money if you have a hard time controlling your spending.
Having an account that is easily accessible, such as the account linked to your debit card, and an easily accessible savings account for bills that are to be paid sooner than later are also important to have. Whenever one of those upcoming bills that you put money away for in those inaccessible savings accounts approaches, you just have to transfer the funds from the inaccessible bank account to the accessible savings account and that’s it. You already have to money to cover that bill in an account specifically for that payment so there are no worries about not being able to cover it!
So, if you are struggling to keep track of your short-term savings for upcoming bills, then having more than one short-term savings account may be the right thing for you. I know it was the best financial decision our family made!