Beyond the Bank: Smart Alternatives to Traditional Savings Accounts

If maintaining a separate savings account helps my finances, could it also help yours?

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When it comes to managing money, I generally try to simplify things as much as possible. For example, I've made sure to keep all of my investments with the same brokerage firm, and I only have two credit cards instead of carrying multiple different cards in my wallet.

But while I generally tend to abide by the less-is-more approach, this isn't true when it comes to bank and checking accounts. In fact, I've made the decision never to keep any money I'm aiming to save in my regular checking account. Instead, I actually have multiple different savings accounts I move money into each month.

There's a few simple reasons I keep my savings and checking accounts separate. Here's what they are.

1. I don't want to make spending my savings easy

The biggest reason I won't keep my savings in my checking account is because I don't want it to be too easy to spend that money. I've chosen savings accounts that make withdrawals a little complicated and that take several days to transfer my money. I did this on purpose, because I don't want my savings to be too accessible.

The more easily I can withdraw the money, the more likely it is I'd end up spending it on unrelated things by accident, or making the choice to "borrow" from it for other purposes -- and risk never putting it back. But by creating more barriers to access the cash, and keeping it separate from my spending money, I increase the chances that the cash I've transferred into savings stays where it belongs.

2. Separate accounts make tracking my goals simpler

Another big reason I keep my savings outside of my checking account is that I want to know exactly how much I've put aside for different goals.

I have specific objectives I'm hoping to achieve when it comes to both short-term and long-term savings. I've broken my goals into both monthly and annual ones to maximize the chances I'll be successful at hitting my targets. And I regularly track my progress so I can make any necessary changes.

By maintaining separate savings accounts, I can see at a glance if I've hit my monthly target and if I'm on track to achieve my overall objective by my deadline.

3. I want to maximize the interest my savings earns

Finally, I want to make the most of the money I'm saving and get any help I can in growing my account balance. This means I'm always looking for opportunities to get paid as much interest as possible on the money I have saved.

My checking account doesn't pay any interest on my balance, and most checking accounts either pay no interest or a tiny amount. High-yield savings accounts can provide a much better return on my money, so I've taken the time to research accounts that will reward me the most.

Each of these three reasons would be justification by itself for not mixing my savings and checking account balances. And if you're currently struggling to try to save money within your checking account, you may want to think about opening separate savings accounts as well.