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.
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.
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.
Why Capital One 360 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.
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.
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..