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Like most people, we have several large expenses that we only have to pay once or twice a year like homeowner's insurance, car/home repairs and improvements, and saving money for a vacation. What's a good way to organize money for these expenses?

We're very good at saving and have a savings account where about a third of our paychecks are deposited each pay period. When that account reaches a certain balance we move the excess funds into investment accounts.

When one of these big expenses comes up, we pull money out of the savings account to pay it. The downside to this approach is that all the money is mixed together. Even though we know that $X is for vacation and $Y is for insurance and so on, I think we could be way more organized in how we approach this. Plus it makes it tricky to "save for" big expenses like a vacation when everything is blended together.

What are some strategies or tools we could use to earmark funds for different expenses? Some ideas I have:

  • Open multiple savings accounts, each with a different "goal" (emergency fund, vacation, etc). Pros: easier to see where all the money is going, and it's clear when you take money from one to fund another. Cons: it's a extra work to administer and I'm not sure if banks "like" you to a bunch of savings accounts?
  • Use Excel to track how much money we're planning to spend on each category and keep everything in one savings account.
  • Online tools: our bank doesn't offer any tools to track this sort of thing on their website, but I wonder if some banks do, or if there's a good third-party app designed for budgeting your savings instead of budgeting for monthly expenses?
  • PNC's "Virtual Wallet"-type accounts do have a "Savings Engine" feature that allows you to create and track goals within accounts. Also depending on which state you're in, the Growth (savings) account in the VW pays a very competitive 2.40% APY. – Ben Voigt May 26 at 22:45
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Open multiple savings accounts, each with a different "goal" (emergency fund, vacation, etc). Pros: easier to see where all the money is going, and it's clear when you take money from one to fund another. Cons: it's a extra work to administer and I'm not sure if banks "like" you to a bunch of savings accounts?

Online banks such as but not limited to (and listed alphabetically) Ally and CapitalOne 360 make it trivially easy to open new accounts with a $0 balance, give them nicknames, set up automated transfers, etc.

They do that specifically for your use-case.

Use Excel to track how much money we're planning to spend on each category and keep everything in one savings account.

That's what I do (pedantically, I use Libre Office Calc), because it allows me to:

  1. temporarily drive one or more "accounts" -- really just columns in the spreadsheet-- negative. As long as the sum is positive, the bank doesn't notice, and
  2. reorganize the "accounts" as I see fit, when I see fit, experimenting, rolling back the changes, etc.
  • I personally use Excel sheet too but I find free tools like Personal Capital help track expenses, income and net worth. Moreover you have notifications for things like how much you spent this month vs this time last month (last week) etc. Put together I can track inconsistencies and make strategies for ironing them out. Discipline is a big key, of course. – perennial_noob May 26 at 4:10
  • @perennial_noob spreadsheets do everything I need them to do, the way I want them organized (because I developed them), not the way someone else thinks it should be organized. They're also flexible, for when I need to correct things. – RonJohn May 27 at 5:26
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Here's what I have done to solve much that same problem. It helps if you are in a locale where having an extra bank account and pre-registered recurring transfers doesn't cost extra.

First, as I get paid monthly, I did everything I could to pay as many bills as possible on a monthly schedule. If you get paid on a schedule other than monthly, just mentally replace "monthly" with whatever your pay period is as you read further.

For those bills which I still get less often than once monthly, I wrote down a list containing, among a few other bits mostly for my own use:

  • Company
  • Service or product rendered, or something else to remind me what this is for
  • Payment schedule (e.g. quarterly, yearly, every two years, ...)
  • Last payment date
  • Expected next payment date
  • Expected next payment amount
  • Calculated monthly equivalent amount

You can trivially use a spreadsheet for tracking all of this, or even paper and pencil if you like a low-tech solution.

Go through all your recurring bills as far back as you need to feel confident that you've captured them all, and note the ones that don't correspond to your payment period. (I also noted the ones I get on a monthly basis, but that's optional for this to work.) This is likely to take a while to go through; on the upside, it's a one time thing. While you're at it, you may want to pad the "expected next payment amount" slightly, say by 5% or so, to account for price increases.

As an example, if the last insurance bill is for $200 per half year, that corresponds to $200 / 6 ~ $33/month. Add 5% to this, and the calculated monthly equivalent amount becomes $35.

Next, figure out how many months have passed since you last paid this bill, and multiply by the monthly equivalent amount for that bill. This will be your backlogged amount. Suppose you paid that insurance four months ago, which means you expect to pay it again in about two months. You will need to set aside 4 x $35 = $140 for this bill to get things started. This is technically optional, but I very highly recommend it.

Once that's done, either decide to just use that account to pay those bills, or set up recurring transfers to the account that you normally use to pay those bills for the padded amount, with appropriate recurrence. In the case of our fictional insurance bill, you would set up a recurring transfer for $210 every half year and with a starting date near the expected next payment date.

The final step is to sum all the monthly equivalent amounts, and set up a monthly transfer to the account which you set up for this for that total amount.

This turns all of those pesky non-monthly, large bills into a fixed, lower monthly cost. When the bill arrives, you pay it normally, safe in the knowledge that the money is there.

Remember to keep the list and the bank transfers up to date; for example, if a bill comes in larger than expected, consider whether the expected next payment amount is still reasonable, and adjust as necessary. Also don't forget to note any new regular bills you're adding, for services you're signing up for, as well as of course remove those that correspond to services you're no longer paying for. Long term, this will only work as well as you're willing to continually keep it up to date, but keeping it up to date is a lot less work than it is to initially set it up.

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My credit union doesn't care how many sub-accounts I have.

I currently have as sub-accounts:

  • An account I call escrow to handle the property tax and homeowners insurance.
  • One I call loans in which the money for the mortgage goes every two weeks, but the mortgage payment is every month. It was also used in the past for car loans.
  • One for my life happens fund. If an appliance breaks or the car breaks the money comes from this account, then I refill the account over the next several months.
  • One for company travel. They quickly reimburse me, but I only have to pay the bill monthly. In addition the trip can be spread over multiple statement periods. I use my card for the cash back, so the sub-account allows me to not worry about the balance.
  • One for vacation funds.
  • One for home repairs. We saved for a new roof last year.
  • One for the next car, though it is several years away.

I used to have a checking sub-account when I was renting out my old condo. But I closed that account after I sold the place.

In the past I have also had ones for CD's.

They never cared. It takes just a few minutes to make a new one on-line.

I used to use Excel to track the balances and goals. I still use excel to do the annual calculations, but track them in Quicken. It is even possible to track them as virtual accounts by creating "cash" accounts in Quicken, but that involves some actions that feel like double-entry accounting.

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You either create of budget, or find more ways to make money (a side hustle, investment, etc) so that you don't have to worry as much about having a budget. Good luck.

  • 1
    IMO, this answer doesn't really add value as there is nothing that the other answers haven't addressed and it is hazy on details. – perennial_noob May 26 at 4:05

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