How we manage our savings accounts (and where we keep our Emergency Fund)

by Melody on February 26, 2013

As part of the first “Baby Step” in Dave Ramsey’s Total Money Makeover“, we saved $1000 to keep as our Emergency Fund.  The point of this fund is to set it aside and forget it and NOT use it for “emergencies” like needing a new pair of shoes.  I did have a hard time setting this money aside, knowing that we had so many other bills to pay in the beginning.  However, if we had not done this and a true emergency did come up, we would have fallen right back into the credit card trap.

We wanted to keep the money in a place that was not accessible with just the swipe of a card, but we didn’t want it totally locked away either.  We chose to keep it in a savings account through Capital One 360 (formerly ING Direct).  We have to request a transfer of money to retrieve our funds, but it only takes 2-3 days.  This keeps the money at least semi-fluid.

We chose to open several sub-accounts under our main savings account:

  • Emergency Fund – Our original $1000
  • Kids Fund – Any extra birthday money my kids get
  • Car Insurance – We pay our insurance every 6 months, so I divided the total by 6 and deposit the appropriate amount in this fund each month.
  • Preschool – We figure out our yearly cost (minus summer months) and divide by 12. The monthly amount goes into this account.
  • Home – Our utilities, city bill and irrigation are not monthly, so I try to estimate what we will pay over the course of the year and divide by 12.

It is super easy to link our checking accounts with Capital One 360 and transfers take less than 30 seconds to complete.  I will be honest, the interest rate is not very high but after comparing rates at other banks or online savings accounts, there wasn’t enough difference to make it worth the switch.  We’re comfortable with this site and our main goal for these accounts is not necessarily to make money.  We just want a safe and easy place to hold our money, that may make us a few dollars in return.

For smaller purchases or items we are going to be purchasing in the next few months, I keep the money in our main checking account but “set it aside” in a Google Doc.  For example, we currently have savings columns for our upcoming Vegas trip and Landscaping.  We just moved into a new house and have an entire backyard to excavate, landscape and garden.

I’d love to hear how you manage your savings or any other programs you’ve used and been happy with.

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{ 1 comment… read it below or add one }

Janene March 3, 2013 at 7:16 pm

You make it sound easy! I have 4 mostly active savings type of accounts:

montly IRA Roth contributions
monthly Money Market contribtions
regular Savings account(keep $1,000)
regular Checking Account(I use for on hand cash/emergency)

Right now I work hard to keep $4,000 in my checking~all cell phones,landline phone,cable,internet,w/s/g, groceries, gas & medical expenses come from this account(this is hard) all other money must go into either my IRA or Money Market account. I keep $4,000 because when my husband & I split the bills this amount will cover MY portion of bills & IRA contributions at least for 8 months in case of emergency. Over the years we have realized that we have different beliefs as to how to save/invest money and so we both do our own thing to save but we do pay bills together. If there is an emergency or if work slows down for me (real estate/property mangement can be unsteady at times) I have that emergency money and if that goes away I’ll have my money market. This is how I save money and it’s not the most logical way apparently. My savings account is money I’ll use if my checking/emergency money gets depleted. My money market is because I can only put away so much money each year into the IRA and I’m too chicken to do a 401k.

I save all gift cards from rebates, online pay sites or store purchases made that give me $$ off coupons for stores and use those for Christmas, birthdays, holidays, house repairs, movies, eating out or road trips.


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