🏦 Your savings accounts

My own setup

I'm not a financial advisor. But I'd like to share the setup I recommend, based on my own experience. I think personal finance gets easier when you split things up. That's why I have several savings accounts with different goals, but below are the ground rules I recommend.

1. The buffer account

As mentioned in "Your first emergency account": aim to keep one month's salary on this account. It goes both up and down, and that's completely normal. I both add to and take from my buffer account regularly. It's my most important tool for staying in control of my finances.

2. The savings account

I won't use the buffer account to go on vacation or pay a repair bill. That's what I use the savings account for. A rule of thumb is that this account changes a lot with your living situation. If you live alone, or with a roommate, you "need" less. If you have a family, the savings account should be bigger — if life takes a bad turn, more people depend on you. The rule of thumb says the account's size is income × months. But it's really about your expenses. If you have control of your expenses, it's expenses × months, not income × months, in my opinion.

3. Investing

Once the buffer and savings account are in place, the next step is to get your money to grow. Talk to an adviser at your bank about this. For my own part, I save in index funds. How you go about it is up to you, but keep in mind that invested money often isn't easily available. That's why I prioritize the buffer and savings the highest myself. If you're at a point in life where you can take more risk, the money may grow more here. Again, talk to a financial adviser.

4. All of this is individual

Remember that how you manage your finances is entirely up to you and your situation. I have my own savings accounts for dedicated purposes, but none of my accounts have reached the goals I have for them. So I see it as long-term planning to stay in control. You have to do what suits you best.