I nicknamed my 6 high-yield savings accounts to help me spend less, save more, and buy the things I care about most

Elizabeth Aldrich in Costa Rica. Courtesy of Elizabeth Aldrich

I have over 10 bank accounts. Some people might think that borders on obsessive, but having lots of accounts helps me organise my finances and achieve my money goals.

My favourite accounts are free high-yield savings accounts, which offer interest rates of more than 20 times that national average, allowing me to earn a little extra cash as a reward for saving.

I’m currently in the process of transferring my savings to Betterment’s new savings account because it offers a significantly better rate, but for a long time, I used Ally Bank’s High-Yield Savings Account. Both are free.

The benefits of multiple ‘nicknamed’ savings accounts

Most free high-yield savings accounts now offered by online banks allow you to open up as many different accounts as you want, and you can even nickname each one of them. This is my favourite way to set savings goals for myself and track my progress.

A lot of my disposable income goes into these savings accounts, even if I plan to spend it a month later. Firstly, it can take three to five days to transfer money from a high-yield savings account back into your checking, and Ally Bank doesn’t offer debit cards to give you instant access to your funds. I actually like this because it prevents me from spending my money impulsively. So, if I don’t need it for bills, food, gas, or other necessities, it goes directly into my high-yield savings account.

From there I divvy up my money into various accounts that categorise it based on my current financial goals. These are my main savings accounts.

My emergency savings fund

This account stays at a consistent $US10,000, which is what I consider to be the bare minimum of what I would need to survive six months without income. I don’t ever touch this money unless it’s an absolute emergency, and so thankfully, I haven’t needed to tap into it so far.

Examples of things I would use this money for include bills and food in the event that I lose my income, unexpected expenses like medical bills or major car repairs, or a flight home during a family emergency.

My ‘f–k off’ fund

Slightly different from my emergency fund, my “f–k off” fund is for times when I need extra money for something that isn’t necessarily an emergency but would drastically improve my life. I keep $US10,000 in this fund as well and haven’t touched it yet.

Examples of what I might use this money for include quitting a job that’s become toxic, leaving an uncomfortable housing situation, moving to go to graduate school, or hopping on a one-way plane ticket to a restorative retreat after a difficult life experience. This fund makes me more likely to take risks in both my career and personal life knowing that I have money to fall back on.

My ‘no impulse purchases’ fund

This account is for purchases over $US100 that I want to make in the short-run, and I keep the balance at $US0. If I want to go out to eat once in a while or need some new clothes, I do, but I’m not allowed to spend over $US100. If I find myself wanting something like a new couch or an outfit that costs more, I have to first save up the money for that purchase in my “no impulse purchases” fund. This ensures that I don’t overspend on things I don’t really want and gives me some time to mull over how much I really want to purchase the item, so I avoid buying things impulsively.

Making sure the rest of my spending enhances my life

I also have a few savings accounts that I deposit into and withdraw from on a regular basis. These are spending categories that I want to intentionally save money for, and they include:

  • My “self-care” fund, which has gone toward therapy, massages, and paying for services that free up my time when I need a day off.
  • My “invest in yourself” fund, which has gone toward online writing courses, educational books, and a new professional website.
  • My “treat yourself” fund, which has mostly gone toward vacations, concerts, and fancy dinners where I order a bottle of wine instead of just a glass.

Having multiple accounts helps me keep my priorities straight. I actually end up getting to make self-care and self-improvement purchases more often because I deposit money into those dedicated accounts before I get a chance to spend it on other, less fulfilling purchases.

Why not have 10 different accounts, when they are so many options now for free, online savings accounts? My high-yield savings accounts have helped me curb overspending and funnel that additional money toward the things that really matter in life.

Learn more about Betterment’s high-yield savings account »