I never want to feel the way I did when we had no money in the bank, had to borrow money just to pay our minimum payments, and didn’t even have enough cash to buy milk for our kids. Never again.
After three years of struggle, when we had finally paid off our debt and had more cash flow due to all those minimum payments being gone (yay!), we started up some specific savings accounts. Now, ten years later, they have served us so well that I will never be without them.
Savings Accounts You Need
I have five “VIP” savings accounts. These are the bare minimum for me.
1) Emergency Fund - We started a $1000 Emergency Fund before getting out of debt, and having that money set aside saved us a ton of headaches!
Once we were out of debt, we started increasing the Emergency Fund, and I started adding other savings accounts:
2) Car Repairs - Cars ALWAYS need something, it seems. (We just got two new tires last month.)
3) Home Maintenance - Stuff breaks. Even if you rent, have a fund for repairing at least the appliances that are yours.
These two savings funds (Car Repairs & Home Maintenance) catch a ton of small emergencies, leaving our Emergency Fund intact.
4) Vacation - We all need a break from our every day life once in a while. We love travel and wanted to take a cross-country road trip, so this was the first big "want" we saved for after paying off our debt. But even while we were paying off that debt we took frugal trips within driving distance. Do you have a trip in mind for after you get out of debt? Or simply one that you need to save up for?
5) Retirement - I don’t want to HAVE to work forever, do you? Retirement funds are something we know we need to get to, but we can put off for later. Start now, even just a little each month will get the ball rolling.
How Much Should I Save in Each Category?
How much should you save when you’re just getting started with savings accounts? There is no one right answer. But that said, here are my general recommendations:
- Emergency Fund - $1000 to start. Work up to 3-6 months’ worth of bare-minimum expenses for your family.
- Car Repair - $500 to start. Work up to the replacement cost of your car.
- Home Maintenance - $500 to start. Work up to big project costs.
- Vacation - $50/mo to start. Work up to big trip costs divided by months to save.
- Retirement - $50/mo to start. Work up to maxing-out options.
Of course, these amounts are just suggestions. Do more or less depending on your own situation and income. If you have to start with saving just $5 per paycheck, then start there. Don’t believe that a small amount won’t make a difference. It makes a difference in YOU, and changes your behavior, even just $5 at a time.
Where’s the Best Place to Keep My Savings?
Your regular bank savings account.
- Keep a spreadsheet or use an app to track your own “sub-accounts” to know how much is set aside for each separate goal.
- Track sub-accounts through categories with the You Need a Budget (YNAB) app.
- A Sunny Side Up Life’s budgeting worksheet includes a section just for savings goals.
An online bank with multiple savings accounts or “buckets.”There are lots now where you can have as many different sub-accounts as you want. Here are a few options I like:
- Ally Online Savings allows you to use up to 10 savings "buckets" within your account to organize your money into sinking funds.
- Capital One 360 Performance Savings allows you to open up to 25 savings accounts under one umbrella so that you can track all your sinking funds at once. (I love my Capital One 360 account! Sign up through my link and get a $25 bonus when you open a 360 Savings account.)
- Barclays Online Savings allows you to create “savings goals” within their app. You can even set target amounts and a target date to have the money saved by! allows you to use up to 10 savings "buckets" within your account to organize your money into sinking funds.
Track Your Goals
Like any goal, saving money is easier and proven to go faster if you have a visual to track your progress. Luckily, Debt Free Charts has over 100 savings charts to help you on your way.
Start with the Starter Emergency Fund chart. It’s free! Download it, print it out, and get started. There are 100 spaces on the chart, so just divide your total goal by 100 to figure out how much each square is worth.
Other Savings Charts
You can also use the Getaway Chart for that vacation you’ve been dreaming about since you started your debt-free journey.
Or browse all my savings charts, and download whichever ones catch your eye.
When you’re just trying to make ends meet, saving can seem daunting. But there is hope! Start small and work your way up when you can. You’ve got this!