Online high yield savings accounts were a great invention that I was a bit late to join. Aside from generally offering a higher interest rate (geez I miss the rates from 2006), they generally let you open multiple accounts easily with no minimum balance requirements.
Sometime after I started my first job in high school I turned into a spreadsheet geek. I would track my savings in one account to multiple goals using a spreadsheet. Now I can use multiple accounts to track those goals. Some people are critical of “digital” envelope budgeting, but I think whatever works for someone is fine. No judgements.
I have my paycheck direct deposited into a couple different accounts so that I can save for each bill separately. I do this so I’m not “surprised” (aka stressed) when a big bill, like my auto or home insurance, comes due. Each paycheck I set aside a portion of that bill into its own account.
Sure this may sound little obsessive but I’m a visual person. This also helps keep me from diverting money meant for one bill to pay for something else.
And in 2017 I started with a new approach as there are a few “newer” options for multi-account banks that don’t require minimum balances (i.e. think CapitalOne, Ally, and probably others). I moved the savings for my annual bills to a different bank. I did this so that I could somewhat forget about the money existing month-to-month and make it a little harder to divert the funds.
As we close out 2017 I just added a checking account to that second bank. I’ve been driving myself a little crazy with having the direct deposit into yet another bank (because they have a monthly minimum of direct deposit to avoid fees). Because I already a few savings accounts at the bank, setting up the checking account only took a couple of minutes. EASY! Now I can direct deposit into that checking account the money I use to save for annual bills and transfer within the bank from there.
What about you? How do you save for your annual expenses?