In the past I was exclusively banking with one bank, having everything there: my checkings account, my credit cards and two savings accounts: one for emergencies and one for fun things such as travelling or shopping.
The one thing I realized eventually was that I was cheating myself from saving money. Everytime I would log into the app I would see the amount of money I had in my accounts giving me a false sense of being “rich”. Not rich as in I have a lot of money but rich in the sense that I had money that wasn’t part of my budget but that I could use. Another issue was that it was readily available, I could transfer it into my checkings account with a few clicks and it was immediately visible in the balance.
What all of this did to me was, that although I was putting money into my savings accounts every month, every time I would go out shopping or think of something I “needed” I would transfer money and use it to buy things, because after all I had it. This lead to me not nearly saving as much as I wanted to and could have, leaving me frustrated and disappointed with myself.
To get out of this vicious circle I opened a savings account with Barclay online. Not only did the pay a rather competitive interest rate at the time (and I think they still do with about 1%) but they do not take any money for managing it, opening accounts and the do not require minimum deposits. You can open numerous accounts based on your needs without having to pay extra.
So now I have three savings accounts:
- Emergency Savings (this one is with Barclay)
- Travelling Savings (this one is also with Barclay)
- Fun Savings (with my bank)
And the reasons for putting the accounts with the biggest savings with a different bank are these:
Out of sight out of mind
I scheduled automatic deposits into my savings accounts, so once the money is gone from my checkings account it is gone and I can no longer see it when logging into the app. I also did not download the app for Barclays, so at times I don’t know how much is in my account and I am not tempted to use the money.
No longer immediately available
I am also not tempted to use the money out of impulse because it takes about 3 days to transfer money to my checkings account. Using the money is therefore no longer an immediate fix, stopping me from impulse purchases.