THE BROKEN WALLET

As a disclaimer, this tip isn’t for everyone. It’s more so for people who treat their savings as an extension of their checking account. In which case, there’s a tendency to dip into it unnecessarily.

Having both accounts with the same bank usually means they’re linked in some way. You can often use the same login credentials and the same ATM card, meaning you can instantly transfer cash with just a few clicks. While this is convenient, having backup funds so readily available might encourage overspending.

On the other hand, keeping these accounts at different banks creates a buffer or distance between your savings and checking. This isn’t a completely foolproof tip, obviously. Still, the extra step of having to transfer money from one bank to another can slow you down, giving you a chance to rethink dipping into your savings.

2. Open more than one savings account

Many people have a single account for all their savings goals. There’s nothing wrong with this, but there are benefits to having multiple accounts.

Using more than one account can maximize your savings because you’re creating separate funds for different purposes or goals. From experience, it can get confusing when everything is in one pot. You might lose track of the intended purpose for funds or forget how much you’ve set aside for each purpose. And if you’re not careful, you could end up spending some of your emergency fund on non-emergency expenses like vacations or gifts.

My recommendation (and what I do myself) is having a regular savings account with a local bank or credit union that holds rainy day funds – maybe $1,000 to $2,000. This provides immediate access to cash for smaller emergencies (cash you can get “day of” with your ATM card).

The second account is your actual emergency fund, which holds 3 to 6 months of living expenses. I suggest keeping this in a high-yield savings account with an online bank to earn a much higher interest rate. For other goals, such as a down payment fund, vacation fund, or a new computer fund, you can create a separate sinking funds account. 

You can either open a sinking funds for each goal or use an online bank like Ally that lets you have different buckets or categories for one savings account.

(Related: What is a Sinking Funds Account?)

3. Name your savings accounts

You can also maximize your savings by naming your accounts. When you give your savings account a specific name like “Emergency Fund” or “Vacation Fund,” this creates a tangible reminder of what you’re saving for.

This simple adjustment can make it easier to stay committed to your savings plan, especially during times when you’re tempted to spend money on things that don’t really matter.

Naming accounts also keeps your money organized and prevents confusion when you have multiple accounts with similar balances. You might forget which account is earmarked for a particular goal.

4. Choose an inconvenient bank

This reduces unnecessary withdrawals because getting to your money takes more effort.

An inconvenient bank is one that’s far away from your home or work, meaning you have to drive out of your way or make a special trip to get your money. It can also include a bank that doesn’t have many branches or ATMs, or an online-only bank that doesn’t have physical locations.

Of course, the main downside is that it takes work to get your cash. But if you’re serious about saving money and reaching your financial goals – and you haven’t had a lot of success using a bank or credit union that’s closer to your home or work – opening an account with an inconvenient one might pay off in the long run.

5. Get a HYSA without an ATM card

High-yield savings accounts (HYSAs) vary. And while some online banks give customers an ATM card, others don’t. I personally feel this is a perk because you’re less likely to withdraw money on a whim. Instead, you would have to transfer funds from your HYSA to an offline bank, which can take 24 to 48 hours.

Some people might not like this feature, but it’s helpful if you have a problem with impulse control or if you regularly dips into your emergency fund for non-emergency expenses.

(Related: Grandma’s Best Money Saving Tips)

6. Set up automatic transfers to maximize your savings

Automatic transfers can help you save on a more consistent basis. When you automate, you don’t have to rely on willpower to transfer money into your account each month. As a result, you can build your account faster. Automating also helps you prioritize your savings. (Sign up for Acorns and automatically save and invest the spare change from each purchase)

This is key to paying yourself first.

Some people do the opposite and pay themselves last. Meaning, they pay their bills and do everything else with their money throughout the month, and move cash into savings ONLY if there’s something left over. That’s actually a backwards way to manage money, though. With this approach, there’s a good chance that you won’t have anything left (or you’ll have very little).

Paying yourself first involves treating your savings like another bill and transferring funds into this account BEFORE doing anything else.