Each of us has different financial goals for different milestones in life. Sometimes it can get messy when you just dump them all in one account so it makes sense to open different types of accounts for each goal. Today we are going to talk about the different types of savings account you should have.
Sahirenys of @poisedfinancelifestyle is one of the blogs I currently follow. She is the creator of the High Five Banking Method. What it basically means is to create five separate bank accounts each with their own purpose. Everybody tells you about budgeting but this girl tells you how to organize your money. She tells you the type of savings account you should have. Organizing my money like her has changed my life! The 5 accounts below is what she recommends.
- Checking account # 1- for household and fixed expenses
- Checking account # 2 – for lifestyle and personal spending
- Savings Account # 1 = Emergency fund
- Savings Account # 2 = Long Term Goals
- Savings Account # 3 = Short Term Goals
These accounts are self-explanatory and what should be in them. I tested this method for a bit but I find 5 accounts excessive for the way I organize my money. So here’s my version of this method:
- My payroll account – This is where my paycheck comes in and I use this to pay my bills. Right from the bank app.
- My emergency fund account – This is with BPI. ATM only and no passbook. Not sure what was the name of this type of account though because I opened this years ago. If you don’t know what an emergency fund is yet or don’t know how much to put into it, read my previous blog here. Open one here.
- Long Term Goals Account – This is with Security Bank. No ATM and passbook only. I choose to not get an ATM with it so that it will not be easy for me to withdraw. This has a 1% interest rate which is the biggest among all PH commercial banks. Plus, it’s very easy to open an account online! I haven’t been able to put much in here yet because I was so focused on completing my EF and my pay was reduced a couple of months ago because of CoVid19. This will house my dream house and wedding fund. Open one here.
- Short Term Goals Account – This one is with CIMB which is a digital bank. I opened this through my Gcash account. It has a 4% interest rate and I use it to house my short term goals like a new gadget, trips, concerts, Christmas gifts etc. I don’t technically have sinking funds but I do save up for a couple of things and dump everything here and just track them in my Personal Finance sheet. Open an account here.
I have tried and tested a couple of things on my personal finance journey. Some of them are still are ever-changing and some stayed. My 4 bank account method is one of the things that stayed. Putting a name on my savings accounts and attaching different money goals to them was a game-changer for me. I encourage you to try this one or Sahirenys’ High Five Banking Method, or perhaps revise it to your preference and let me know how it worked out for you.