Our Savings System – Lots of Goals!

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by Elle Martinez · 20 comments

Our Short and Long Term Goals

I’ve mentioned before that having a financial game plan as a couple is a big part of reaching your goals. It can help you two develop ways to communicate effectively and focus your energies on what matters to you.

Like many other couples, we have several goals that we’re looking at achieving together. Some of our goals are for the short term while others are more long term and bigger in scope.

For these goals, we have savings accounts to organize our finances, motivate us, and help our money grow during the process.

Short Term Goals (1 year or less)

  • Emergency Fund – If both of us are employed, then we’re comfortable with at least 3 months saved. If one of us is steadily employed then we prefer 6 months or more in the bank. This money is not touched unless there is an emergency.
  • Vacation Fund - I should point out that vacations are paid with the credit card first and then we pay it off before the grace period is over. We would rather not have a hold on our checking account for car rentals and if there is a dispute, it won’t affect our day to day routine as the credit card works it out.
  • General Savings- This catch-all savings is basically for when we have some extra income that we haven’t allocated yet or for future planned purchases, like car repairs,  upcoming video games, and electronics.


We keep our general savings and emergency fund in the same account. I know some people may view having an emergency fund mentality as a crutch, but we’ve found it to be the opposite- we’re doing better financially. I think having an emergency fund can be good or bad, depending on who’s involved. I’ve seen how people have dipped into their emergency fund for frivolous purchases.

I’ve also seen how building and maintaining an emergency fund has encourage people to continue building their finances. Having the psychological win spurs people to move onto other aspects of their finances, like debt reduction, investing, and entrepreneurship.

Getting an emergency fund started and maintained means looking at your family’s personal needs and adjusting to it. Here are some factors you may want to consider with your savings.

  • Family Size - If you’re a dual income couple with no kids or other family obligations, then you’ll probably won’t need as a big of en emergency fund as a family of 5.
  • Family Expenses – Your family’s lifestyle has a big effect on the size of your emergency fund. If you have high monthly expenses, then logically, you’ll need more money to save. If your expenses are due to unnecessary spending, then you may want to discuss ways you can lower it. If it’s due to circumstances (i.e. medical bills), you’ll have less room to work with. It’s still possible though to explore options to lower your bills.
  • Income Streams – If you have 2 or more income streams coming in, that can decrease the size of your emergency fund. You should still have one though, as unexpected events can happen.

One last note on our short term savings accounts – our main goal with them is to be accessible, so we prefer having them available in high interest savings accounts rather than CDs.

Medium Term Goals (2-4 years)

  • Car Replacement Fund: As you can tell from our previous posts, my husband and I have been trying to avoid car loans for awhile. We paid off the car loan on the Jetta and haven’t looked back.

It’s quite possible to get a really good car if you’re serious with your car replacement fund. You need to commit to a set monthly payment (to yourself!) and a time frame for buying your dream car.

If you’re looking for general guidelines, here are my recommendations:

  • Current Car is between 1-3 years old- Wait 5-6 years for your next car
  • Current Car is between 4-6 years old – Wait 3-5 years for your next car
  • Current Car is between 7-9 years old – Wait at least 2 years for your next car

You can read my car buying guide to get the details of the plan. Right now the plan is getting a new car for me in about 24 months. The Jetta seems to be doing well and I’m making some low cost repairs to keep it looking as new as possible.

Long Term Goals (5+ years)

  • Freedom Fund: Our goal is for both of us to have location independent (mobile) jobs. While we don’t have currently any plans to live abroad, I like having the option.  Besides saving money on daily commutes for my husband, he’d also like more control on projects that he takes on. He loves being a software developer and with his talent and disciple, I think working from home would be beneficial for him and his company.

This has been a goal for us before we started this blog and I think it’s time for us to create a plan to get this account started. By our original estimates, we wanted to have the freedom fund ready in 4 years. I think we have a chance of making it, we just need to get more organized on this goal.

We currently have a low interest student loan and our mortgage as our only debts. Right now, the goal is to pay off the student loan and have buffer fund to handle expenses if/when he makes the transition.

I’d really like your feedback with this long term savings goal. If you’ve started one, how did you go about it? Did you pay down all your non-mortgage debts first and then worked on it. Or did you deposit something in there while working on your other financial goals? What’s your suggestion on how to how much to save in the account?

Why ING Direct for Our Savings?

We’ve been with them for years and love it their checking and savings accounts. They have all the major features we’re looking for with a bank:

  • Covered by FDIC
  • No monthly maintenance fee
  • $0 required minimum balance
  • Free online BillPay service
  • Conveniently located ATMs
  • Earn some interest rate if possible

While they don’t have the highest rates, they’re still competitive and their customer service has been great for the few occasions we’ve had to use them.

Automating Our Savings

The key to keeping our goals is automating our deposits to each of the savings accounts. We have some money transferred over from checking to savings regularly, like a bill. when we first got married and our income was really small, the deposits were small, but as we’ve received raises, we’ve been increasing the deposits accordingly.

If you’re looking to get started, find an FDIC bank or CUNA credit union in your neighborhood that offer high interest rates for savings and watch it grow faster. Look at Bankrate to compare checking and savings accounts. You should be able to find something to suit your needs.

If you’re looking at jump starting your savings and think your social network can help, you may want to look at SmartyPig. Besides offering good interest rates, it also allows others to contribute.

Prioritizing Deposits

As deposits come in, we allocate it to the appropriate savings account. While there is a minimum monthly deposit, due to the valleys and peaks I sometimes prioritize where the ‘extra’ money goes into.

Currently our plan is:

  • Car Replacement Fund (50% – until goal is met)
  • Freedom Fund (30% )
  • General Savings (20%)

I’ve upped the scheduled deposits starting next month and I’m hoping that we’ll see some little windfalls to put some more aside for our goals.

Thoughts on Savings and Goals

I’m not saying our savings system and accounts are the best way to go for you. I’m just pointing out how the system has helped us. I know everyone has their own system, so I’m curious to see how you guys do it. How many bank accounts do you have? How do you stay on top of it? I’m be curious to see how others handle this.

Please share your thoughts – I think it’ll be great to learn how others have accomplished their financial goals as couples.

Photo Credit: linh.ngân

 

About Elle Martinez
Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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  • http://www.financialsamurai.com Financial Samurai

    An emergency fund is a necessary crutch/support in the very beginning. But it’s important to move beyond an EF and think about bigger wealth creation after a while. Cheers

    • Elle

      I agree – you can’t build wealth with just an emergency fund. I’ve always enjoyed your posts and even when I may not agree with them, you’ve always gave some food for thought. Keep it coming Sam!

  • http://www.myjourneytomillions.com Evan

    I am going to love reading about these goals and your accomplishments as you go forward. The Wife and I have:
    Vacation Fund (turned off because of next account)
    Baby Fund – just random baby stuff we will need when he is born in 3 weeks or so
    Long Term Savings – Hopefully a massive house down payment in 18 or so months.

    We don’t really partition out our emergency fund. I never felt the need. But I am with Sam Creating Wealth is much easier than getting to your goals with frugality alone.

    • Elle

      Congrats for your family! Best wishes for the next few weeks.

      I think savings is a component of building net worth, but it’s not the end all, be all. Setting up a savings system can be helpful as people move on to more goals and develop systems for those.

  • http://www.retireby40.org retirebyforty

    I like your saving goal, nicely planned out.
    Our money is a bit more fluid.
    checking – $5000 for expense
    saving – 3-6 months.
    What ever is left over goes into an investment account. If there is a big bill and the saving runs a bit low, we liquidate some investments and replenish the saving account.

    • Elle

      Thanks for sharing your family’s plan. How are your investments arranged? How aggressive or conservative are your portfolios? We’re still investing for retirement only now, but we’d like to change that soon as we pay off the student loan and have some more money to invest with.

  • http://www.gobankingrates.com Briana @ GBR

    We have several different goals, but we’ve kept all of our savings in one account up until recently. We got a SmartyPig account for our wedding fund, but now I’m looking into ING (reading the related posts you have) and seeing if that can help us out. I think this will be a good look for us :)

    • Elle

      Congrats for the upcoming wedding. Saving up for it will be a huge stress relief. When I was reviewing it, I found SmartyPig to be a great savings tool. Please let me know what you think about it.

  • http://www.retireby40.org retirebyforty

    Hey, I posted my money flowchart. Take a look and let me know what you think?

    • Elle

      Love it! I hope more people check it out – definitely gives us some ideas for our financial system.

  • http://www.bucksomeboomer.com Kay Lynn @ Bucksome Boomer

    We’re going to stretch the age of our cars a bit. My husband’s car is 12 years old now and it’ll be about 14 months before we’re non-mortgage debt free and can start funding a car replacement account.

    • Elle

      Good for your you Kay Lynn! I really think my Jetta can hold up until I fill up the car replacement fund, but I’m not sure if I’ll be able to avoid a big car repair before then. To be 14 months away from finishing off all your non-mortgage debt is amazing. Keep it up!

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