Hello everyone! In today’s article I want to talk to you about a way to organize your savings and so you see at a glance what money you have to meet your different financial goals.
For example, what money you have for your trip to India, what money you have saved to buy your car or what money you have accumulated for the entrance to your home.
Recently, I have suggested that a good way of organizing is to have several emergency funds, each one destined for an end. For example, an emergency fund for the maintenance of your home .
It is also a good idea to have others to cover those things that are usually relatively frequent that produce unexpected expenses. Has anyone said an emergency fund for your car?
The problem that may arise is whether it is better to have all this money accumulated in one account or to have it in several accounts. I already tell you that I only use one account and now I will explain the reasons why I do this.
A single account or several accounts to manage your money
The main reasons why I use a single account revolve around two points:
- Privacy , the fewer accounts you have open, the less chance you have of identity theft and you’ll have fewer passwords and passwords to remember … why don’t you use the same passwords to enter different accounts, right?
- Ease of management , managing several accounts is a mess and you should also dedicate some time that is not necessary.
The problem of having all the money for different purposes and funds in one account is that it can be difficult to know how much money is for each thing .
To solve this there are two possible solutions, both are quite simple.
- Virtual subaccounts : The first solution can be given by the bank where you have the account. Some banks, for example VIN Direct, allow you to make virtual sub-accounts and give them the name you want.
You really still have the money all together in one account, but visually you will see it separated and so you will know how much money you already have for each objective and fund you have.
Now when you contribute money to your account, you just have to indicate what amounts go to each subaccount.
- An Excel : If your bank does not have that option or does not convince you, you can always use an Excel where you have divided the money by objectives and funds.
I do not use VIN Direct and I also prefer not to enter my account simply to see that data and I use an Excel. Now I explain how I do it.
An Excel to organize your financial goals and funds
The truth is that it is very simple and has no big secrets.
Each month, I spend 30% of the income I have had on my savings account and then in Excel I indicate the amount that goes to each of my financial goals and emergency funds: vacations, retirement, training, maintenance fund, car bottom.
Of course, if I use some of this money I also reflect it in Excel.
I do everything in the same tab, in one cell I have the total accumulated in the account and then in each row I indicate the name of the financial objective and the amount of money I have for that purpose.
Each month he assured me that the accumulated amount that I indicated in Excel is the same as in the account and so there are no slogans and “lost money”.
It is quite simple. Then you can complicate everything you want by putting, for example, the date on which you calculate that you will have saved all the money to cover a specific goal or some other feature that you can think of but it really is not necessary.
And what about the interests?
As usual, every month the interest generated is accumulated in the savings account. And what I do is divide these interests into each of the objectives that I have set . Same as I do with monthly savings.
With an example you will see it clearer.
Let’s say you save € 300 every month and that you have these financial goals:
- Savings for retirement.
- Save to buy a car.
- Save to make a trip.
Each month in Excel you indicate the total accumulated each month and distribute the € 300 in each of the objectives. Suppose you divide the savings in the same way into each objective, therefore it would be € 100 for each objective.
At the end of the month the account has generated € 12 interest, therefore, you distribute them between each objective, € 4 on each objective.
As you can see it is very easy to track the money you have for each of your financial goals or different emergency funds.
What aspects would you improve on this system? Do you use a different one?