Investing Blog

Putting Savings on Autopilot by Jordan at Investing Blog

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After the pop in interest rates, I’ve grown used to having multiple savings accounts. Every so often I scope out the best interest rates then, shortly after, find myself deep in opening a new account. I’ve finally gotten tired of interest rate shopping, so now I’m just opening a number of accounts all at the same bank.

Credit Union Fun

I’m a big fan of credit unions due to the fact they’re friendly, the interest rates are traditionally better than for-profit banks, and the fact that the fees are practically non-existant. With all these new banking products like “fee checking” (WHAT???), I’m really happy to be at a credit union.

But best of all, transferring money between bank accounts online is a really easy process, and this is why I love the credit union the most.

Saving on Autopilot

Admittedly, I’m not the best saver. It isn’t because I’m a shopper, because I’m most definitely not, but because I’ve never had entirely consistent income. One month I could make a killing, and the next month I could practically lose money. That kind of inconsistency is costing me money…

Rant aside, I’ve finally found a system I can use to keep my expenditures under control. For the big picture, I’m a huge fan of Mint.com. The fact that it plugs into all financial accounts effortlessly and keeps track of balances and due dates is awesome, and probably saved me one or two late fees by now.

But for the nitty-gritty, line item budgeting, Mint just isn’t cutting it. So I’ve become friends with Microsoft Excel again.

Savings Strategy

My new strategy is simple, but should be much more effective. I have now 6 bank accounts, one for each category. Each dollar I earn will flow into the first, where it will then be divided. Each sub account has a minimum monthly contribution followed by a percentage. If I can fully fund each account each month, which shouldn’t be too hard to accomplish, the remaining funds are divided by percentage into the same accounts.

The idea is that with each passing month, and over the course of time, each line item can accrue a positive balance, allowing for emergencies (as in the case of the car budget) or for rollover savings (extra fun money...yeah right.)

I’ll have to come up with a method for transferring over the excess when a threshold is reached, but for now, the groundwork has been done.

About Jordan

Jordan is the web master of www.investingblog.org, a site dedicated to skillful investing, news and recent trends. You can read the original article here.

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