Savings (emergency, sinking, etc.): co-mingled or separate?

[Bird In Hand]

We have a "main" banking account that has savings/checking/vacation sub-accounts.  This is where most of our day-to-day money flows -- paychecks deposited into savings, checks and utilities coming out of checking, and the "vacation" account just storing a small buffer that we don't actually use for vacation.  The extra cash in these accounts also constitutes the bulk of our emergency fund.

We also have a couple different high(er) interest savings accounts (Capital One and Discover), one of which has maybe 4 named sub-accounts.

I'm trying to figure out a sensible approach for organizing our accounts.  On one hand, it is psychologically appealing to have a bunch of specific and separate sinking funds -- for property taxes, roof replacement, vacations, etc.  Somehow it's reassuring to see the $$ amounts allocated to each known future need.

On the other hand, it can be annoying to have our money spread all over the place in various institutions and sub-accounts therein.  Annoying to keep track of, slightly annoying at tax time, and just...more complex than is probably necessary.

At the moment I'm leaning towards three buckets: a modest amount kept in our checking/savings for regular expenses, combining all our sinking funds into one higher-interest online savings account, and the remainder (emergency) in the other higher-interest online savings account.

I'm curious what methods others use for this sort of thing.  Co-mingle?  Separate accounts for each big thing?  One big account and you just have slices of the pie earmarked in your head or a spreadsheet or some other application?

[ixtap]

We have one joint checking account, his and her high yield savings and his and her brokerage. All of the accounting is done mentally, with the principal concerns being short term cash flow and capital gains taxes, rather the money from this account is for xyz purpose.

[zolotiyeruki]

We just have two--a checking account for normal expenses, and a savings account that is a combined sinking fund and emergency fund.  Each year we sit down and create a budget for our sinking fund.  Since those expenses are almost always predictable, we just transfer $X into it each month, and as long as we keep within that budget, we consider it good.

[wellactually]

We have accounts at one institution - checking, savings (emergency), savings (sinking). It was helpful for us to separate out because we were contributing to the emergency fund while contributing and drawing from the sinking fund last year while doing IVF. We could easily go back down to one savings account, but this has worked out well.

I lobbied pretty hard to move our efund to a high yield savings last year, but DH wasn't into it. I finally convinced him and then interest rates tanked! Such is life.

[Paul der Krake]

From a purely financial point of view, having multiple accounts is silly. Money don’t care where money sleeps.

So it’s purely for your own psychological benefit. Move past that, and the answer becomes obvious.

[seemsright]

We keep a few things in their own buckets for accounting sake..escrow, insurance, and utility extra (low in the summer and insane in the winter, this is how we average)  This helps us manage our budget from a yearly point of view. As we pay escrow and insurance yearly.

But it is all in one account and just separated on a spreadsheet. We do not want to mess with multiple accounts, or even write down trying to keep track.

Keeping budgeting simple makes it easy.  I do not feel like it is necessary to have a bucket for emergency funds. Have some in savings, and call it a day. All of the money in the accounts should be working for you, not put into buckets to keep track of.

[Bird In Hand]

Thanks all.  You make a pretty good case for simplifying things.

We'll probably end up moving all but the bare-minimum from our B&M bank to our highest-interest savings account (Discover -- sadly only 0.8% these days) and combine the sinking + emergency funds there.

I forgot to mention that we also do his/hers accounts for discretionary spending.  The amount in these accounts is tiny, and we use sub-accounts at Capital One (online, 0.5%) for this purpose.  We might keep those just because it makes it very easy to see at a glance how much we've spent vs how much is left for the year.

[Zikoris]

We have a different strategy altogether - design a lifestyle where you don't have large expenses at all (i.e. you can't get a big car repair bill if you don't have a car to begin with), and make the gap between income and spending large enough to cashflow virtually everything that you can't eliminate altogether. We keep a few thousand in an all-purpose slush fund to fill in any gaps, but otherwise don't actually save up for anything, and haven't for many years.

[HPstache]

We have one regular checking and one "high yield" savings account in which we store sinking & emergency funds.  We keep a spreadsheet of what each subcategory of the savings account has in it and add the interest to whichever sub account we decide to... usually a fun category like vacation.

[MrThatsDifferent]

We have one regular checking and one "high yield" savings account in which we store sinking & emergency funds.  We keep a spreadsheet of what each subcategory of the savings account has in it and add the interest to whichever sub account we decide to... usually a fun category like vacation.

This is what I do. One reason is that I never use the card associated with the HISA. I only transfer money in, and when need transfer money out. But I never buy or spend anything directly. This way I feel more secure that the money can’t be hacked. I’m paranoid about that but not unreasonably so. I use a regular big bank to receive my pay, pay the credit card and keep $150 in cash max if I need it. (We’re mostly cashless here). I believe in simple and safe. Also, if anything happens to one account, the other is active. I stopped the bucket thing as it was too messy. Use a spreadsheet and it all is tracked better.

[economista]

We have a checking account and a savings account with the same institution. We keep all of our sinking funds for normal spending (car insurance renewal, registration renewal, etc) in that low-yield checking account since the money can be transferred seamlessly. Then we have a high yield savings account where we keep all of our longer term savings for big expenses/vacations/etc. This is also where our emergency fund is, and we have a spreadsheet where we earmark how much of that account is being applied to each savings goal.

We also never keep more than a $500 buffer in our checking account - I would much rather have that money earning interest instead of sitting in a checking account. Every payday (every other week) I reconcile our account, pay off the balance on the credit cards, see how much we need in the checking account for automatic transactions until the next paycheck, and move the difference to savings.