I never want to feel the way I did when we had no money in the bank, had to borrow money just to pay our minimum payments, and didn’t even have enough cash to buy milk for our kids. Never again.
After three years of struggle, when we had finally paid off our debt and had more cash flow due to all those minimum payments being gone (yay!), we started up some specific savings accounts. Now, ten years later, they have served us so well that I will never be without them.
Savings Accounts You Need
I have five “VIP” savings accounts. These are the bare minimum for me.
1) Emergency Fund - We starteda $1000Emergency Fund before getting out of debt, and having that money set aside saved us a ton of headaches!
Once we were out of debt, we started increasing the Emergency Fund, and I started adding other savings accounts:
2) Car Repairs- Cars ALWAYS need something, it seems. (We just got two new tires last month.)
3) Home Maintenance -Stuff breaks. Even if you rent, have a fund for repairing at least the appliances that are yours.
These twosavings funds (Car Repairs & Home Maintenance) catch a ton of small emergencies, leaving our Emergency Fund intact.
4) Vacation- We all need a break from our every day life once in a while. We love travel and wanted to take a cross-country road trip, so this was the first big "want" we saved for after paying off our debt. But even while we were paying off that debt we took frugal trips within driving distance. Do you have a trip in mind for after you get out of debt? Or simply one that you need to save up for?
5)Retirement -I don’t want to HAVE to work forever, do you? Retirement funds are something we know we need to get to, but we can put off for later. Start now, evenjust a little each month will get the ball rolling.
How Much Should I Save in Each Category?
How much should you save when you’re just getting started with savings accounts? There is no one right answer. But that said, here are my general recommendations:
- Emergency Fund - $1000 to start. Work up to 3-6 months’ worth of bare-minimum expenses for your family.
- Car Repair - $500 to start. Work up to the replacement cost of your car.
- Home Maintenance - $500 to start. Work up to big project costs.
- Vacation - $50/mo to start. Work up to big trip costs divided by months to save.
- Retirement - $50/mo to start. Work up to maxing-out options.
Of course, these amounts are just suggestions. Do more or less depending on your own situation and income. If you have to start with saving just $5 per paycheck, then start there. Don’t believe that a small amount won’t make a difference. It makes a difference in YOU, and changes your behavior, even just $5 at a time.
Where’s the Best Place to Keep My Savings?
Your regular bank savings account.
- Keep a spreadsheet or use an app to track your own “sub-accounts” to know how much is set aside for each separate goal.
- Track sub-accounts through categories with the You Need a Budget (YNAB) app.
- A Sunny Side Up Life’s budgeting worksheet includes a section just for savings goals.
An online bank with multiple savings accounts or “buckets.”
There are lots now where you can have as many different sub-accounts as you want. Here are a few options I like:
- Ally Online Savingsallows you to use up to 10 savings "buckets" within your account to organize your money into sinking funds.
- Capital One 360 Performance Savings allows you to open up to 25 savings accounts under one umbrella so that you can track all your sinking funds at once. (I love my Capital One 360 account! Sign up through my link and get a $25 bonus when you open a 360 Savings account.)
- Barclays Online Savings allows you to create “savings goals” within their app. You can even set target amounts and a target date to have the money saved by! allows you to use up to 10 savings "buckets" within your account to organize your money into sinking funds.
Track Your Goals
Like any goal, saving money is easier and proven to go faster if you have a visual to track your progress. Luckily, Debt Free Charts has over 100 savings charts to help you on your way.
Start with the Starter Emergency Fund chart. It’s free! Download it, print it out, and get started. There are 100 spaces on the chart, so just divide your total goal by 100 to figure out how much each square is worth.
Other Savings Charts
Once you’re ready for them, try the Home Improvement Chart for home repairs, or the very cute Get Growing Chart for any savings goal!
You can also use the Getaway Chart for that vacation you’ve been dreaming about since you started your debt-free journey.
Or browse all my savings charts, and download whichever ones catch your eye.
When you’re just trying to make ends meet, saving can seem daunting. But there is hope! Start small and work your way up when you can. You’ve got this!
FAQs
You don't have to put aside an obscene amount of money each month. All this challenge requires is for you to stash away every $5 bill you get as change. That's it.
What is the rule of 5 savings? ›
How about this instead - the 50/15/5 rule? It's our simple rule of thumb for saving and spending: aiming to allocate no more than 50% of take-home pay to essential expenses, 15% of pre-tax income to retirement savings, and 5% of take-home pay to short term savings.
What are the 5 steps in savings? ›
How to Save Money in 5 Steps
- Record your expenses. You do not need to have large amounts of money. ...
- Make your Plan and Set your Objectives. ...
- Planificá y establecé objetivos. ...
- Stay Focused on Your Priorities before Taking a Decision. ...
- Use Saving - Investment Strategies in the Financial System.
How much should you save? While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.
What is the $5 bill trick? ›
All it requires is that you save every $5 bill you get as change. If you're paying for something at the register with cash and the cashier hands you a $5 bill, put it directly into your savings account and pretend it's not even there. Five dollars can add up quickly.
How much is $1 dollar a day for a year? ›
With no interest involved, putting one dollar a day into a bank account (or a jar at home) will see you end up with $365 in a year. Multiply that amount by 30 years and you'll end up with $10,950. Now let's factor in an interest rate of just 1%.
Can you live on $1000 a month after bills? ›
Getting by on $1,000 a month may not be easy, especially when inflation seems to make everything more expensive. But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money.
What is the golden rule of savings? ›
Under the golden-rule of saving, r = n; the real interest rate equals the rate of population growth. In figure 3, the capital-widening ray is parallel to the line tangent to the intensive production function. This parallelism implies that saving per capita equals profit per capita.
What is the 50 30 20 method? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
What are the 5 life saving steps? ›
5 Lifesaving First Aid Skills You Need to Learn Right Now
- Performing CPR. For a lot of people, exposure to CPR (cardiopulmonary resuscitation) is limited to what they see in the movies or read about in health class. ...
- Stopping a bleed. ...
- Executing the Heimlich maneuver. ...
- Using an EpiPen. ...
- Spotting the signs of a stroke.
The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.
What is the 5p saving plan? ›
The 5p money saving challenge is simple. You increase the amount you save everyday by 5p. So, starting with 5p, then the next day 10p and 15p and so on. If you continue this for a whole year, by the end you will have saved almost £3,400.
What is too much in savings? ›
You might have too much in savings if: You have more than your emergency savings and short-term goals. If you've saved beyond your emergency savings goal and any short-term goals, you may not need more than that in your savings account.
How much cash to keep at home? ›
It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.
How much money is saved by age? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
How does the 5p saving challenge work? ›
The 5p money saving challenge is simple. You increase the amount you save everyday by 5p. So, starting with 5p, then the next day 10p and 15p and so on. If you continue this for a whole year, by the end you will have saved almost £3,400.
How does the 5 dollar challenge work? ›
If you are super determined to save money this year, the 52 week $5 challenge is the way to go. For this challenge you save $5 your first week, and add an additional $5 every week going forward. So, week one is $5, week two is $10, week three is $15, and so on.
How to save $5000 in 3 months? ›
Monthly savings: Saving $5,000 in three months equals a monthly savings of approximately $1,667. Weekly savings: Dividing $1,667 by 13 weeks gives a weekly savings goal of around $128. Daily savings: To reach this goal, you would need to save an average of $18 per day for the next three months.
How much money is saved with the 100 envelope challenge? ›
Take stock of your savings At the end of 100 days, you'll have 100 envelopes containing $5,050. That's right—1 + 2 + 3 + 4 and every other number through 100 equals just over $5,000.
