Splitting your savings accounts up, instead of just having one big pool of savings…
It may seem like extra effort, but from everything I’ve experienced over more than 10 years as a financial adviser, splitting your saving accounts up actually yields better results.
The thing is, having just one account where the balance goes up or down depending on what’s going on in your life can often lose it’s motivating factor.
Keep at it
Think about when you’ve really wanted something that you’ve been saving for. You just keep at it, looking at the balance, getting more and more motivated as the account gets closer and closer to your goal amount.
Well, when you have all your savings lumped into one big pot you kind of lose that sense of attachment.
Different pots, different goals
So, I’m a big believer in segregating your savings into different pots, each one representing a different savings goal.
Given that some goals might be close (like a holiday in six months time) and others will be further away (like a home deposit in 3 years), having them separated will mean that when you reduce one to zero because you’ve reached the goal, you won’t feel as dissappointed as you would if your saw the balance of your one big pool, be reduced.
It works for me anyway, and for all of my clients, who are constantly smashing their goals and moving on to the next ones!