Why I Have 13 High-Yield Savings Accounts With Capital One

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• Keeping all of my savings in one account has never worked for me — when I tried it, I could never tell if I had enough money to cover a planned expense or an emergency.
• When I learned that I could open up to 25 accounts with Capital One 360 Performance Savings, I jumped at the chance.
• Now, I have 13 accounts, each one nicknamed for a different goal — travel, emergency savings, taxes, and more.

I love categories and systems, and that extends to my savings strategy. Currently, my family is saving up for maintenance and repairs on our two cars, our six-month insurance premiums, taxes, and a new furnace for our home. My favorite way to prepare for these different goals is by setting up digital savings buckets. 

I have at least 13 different high-yield savings accounts that I use for different goals. I know this may sound like chaos on the surface, but it makes me feel incredibly organized when it comes to managing my finances. 

Why I don’t save for everything in one big pot

I’ve tried the “one big pot” strategy in the past, and I found it pretty confusing. I didn’t know if I could afford to spend $400 on new tires or if some of the money in that account was supposed to go toward an upcoming medical bill. 

As a family of three with two pets, there are so many things to save for. Looking at a big pot of money in the bank can be misleading if that money is meant for many different specific purchases. 

Luckily, about four years ago, I learned about Capital One 360, an online bank that is perfect for the digital savings buckets strategy.

Getting started with Capital One

The bank is known for its Capital One credit cards, but it also offers pretty decent online banking products. Capital One 360 Performance Savings accounts offer multiple times the average interest rate of a traditional savings account at a brick-and-mortar bank.

There are a few key things I like about Capital One’s online checking and savings accounts:

• There is no minimum deposit amount required to open an account and no minimum balance requirements
• No monthly maintenance fees
• FDIC-insured
• All balances earn a higher-than-typical APY
• You can open up to 25 separate savings accounts

The last part really sold me, along with the fact that I could create a nickname for each account. That way, there’s a separate fund for each goal. 

With Capital One, I’m able to contribute to not just one high-yield savings account but multiple accounts based on my goals. All of them earn interest each month, and I can see a summary of each account when I log into my online banking dashboard. 

Right now, here are just a few things I’m saving for with Capital One:

Car repairs and maintenance: My husband and I both have paid-off cars, but they need maintenance from time to time. 

Medical expenses: We have insurance co-pays when we go to the doctor and also other medical bills that may come up. Another purpose for this account is to save money for my son to get braces in the next year or two.

Taxes: As a freelancer, I make it a habit to set money aside each month for taxes. This ensures I have enough to pay my tax bill before the deadline.

Birthdays: My mom, father-in-law, older sister, son, and I all have birthdays within a few weeks of each other in January and early February. After the holidays, it’s likely that we will have a tighter budget, which is why I save for birthdays routinely throughout the year.

Travel: I love to take a few trips every year, but travel can easily get expensive. Saving for travel separately motivates me and provides peace of mind knowing that I can afford to book a trip during the year.

Household expenses: I also like to save for regular household maintenance and expenses that may come up, like a new furnace. A new furnace can easily cost $1,500 or more, so it’s important to set aside money now to avoid the sticker shock.

Emergency fund: Of course, one of my Capital One savings accounts serves as my family’s general emergency fund to cover unexpected costs. 

Emergency fund vs. sinking fund

Notice that I keep my emergency fund separate from my other savings accounts? That’s because all my other accounts are technically sinking funds. Except for my emergency fund, all my other savings accounts have something in common — they are for planned expenses that I expect to incur in the future. 

I know I will have to pay taxes and we will get medical bills eventually. I also know that our cars will need maintenance and that I will travel sooner or later. 

However, what I don’t know is if my husband and I will lose a source or income or if any other surprise expense will pop up out of nowhere. That’s what my emergency fund is for — true emergencies that we don’t see coming. 

The way I like to think of it is: Sinking funds are for planned expenses, and my emergency fund is for unplanned expenses. No one can predict the future, so I would hate to pile all my savings into one account and spend money on a non-emergency only to find out a true emergency occurs just a few days later. 

Keeping 13 separate high-yield savings accounts for savings goals helps us stop living paycheck-to-paycheck. It also provides me with more clarity and financial security, which is another perk of getting organized and finding a system that works for you.

This article was originally published in May 2020.