Sub-Savings Method: A New Era in Money Management
Managing money in today’s world can be overwhelming. Bills, impulse shopping, medication—everything adds up. We constantly stress about money because, despite a monthly income, we still live from paycheck to paycheck. How is that even possible? Well, it means that we are not wisely managing our finances.
You’ve probably tried traditional budgeting methods and didn’t have excellent results. That’s why I am here. I want to introduce you to the world of sub-savings, where all your goals and dreams will be fulfilled while still living your best life. How does it sound? Would you give it a try?
First of all, let’s get one thing straight: in today’s uncontrollably changing world, we face uncertain financial times, and even when we feel like succeeding, things can go wrong in the blink of an eye. But before you roll your eyes and panic about your financial future, you should explore one of the most successful modern budgeting methods: The Sub-Savings Method.
In a world of chaos, the method allows you to divide your money into smaller and even more purposeful savings, offering you flexibility and control over your finances. It will help you stay organized, offering you a sense of structure and clarity.
It’s easier than you can imagine. You need to start by identifying your financial goals and recurring expenses. Once you do that, you need to open separate savings accounts for each one of your goals. Let’s get it started!
The Sub-Savings Method Explained
This Sub-Savings Budgeting Method prioritizes your future purposes and involves creating multiple savings accounts for specific future purchases and goals. Instead of pooling all your savings into a simple account, you need to divide your funds, making it easier to allocate resources effectively.
By following this method, you can accomplish financial goals passively, because you don’t have to do anything else. Your money will be automatically withdrawn to your specific savings goals. It’s considered a highly effective method because you will no longer have to remind yourself to do the transfers.
Many Americans find this method useful because it helps them control their spending impulses. The amount left in your regular account also becomes more manageable. You’ll know clearly how much you can spend without having any regrets.
How It Works
You should begin by making a list of the most important financial goals you have. For example, you might have individual accounts for: emergencies, a new car, a vacation, home renovations, or even holiday gifts. The next step is to choose a bank that allows you to give multiple accounts. Last but not least, you need to set up automatic transfers.
This way, you will determine how much you allocate to each account monthly. Don’t forget to periodically review your accounts to track progress, or even make some changes if needed.
Depending on your needs, you can choose whatever targets you want. This is one of the best budgeting methods because it doesn’t let you give up on any of your dreams.
Does the Sub-Savings Method Really Help You Save More?
The answer is YES. Once you have a fixed amount you can spend each month, it will be easier to focus on your savings.
5 Tips and Tricks for Effective Sub-Savings Budgeting
1. Open accounts that offer higher interest rates.
This way, you will maximize your savings because your money will grow more effectively.
Remember that even though the difference may seem small at first glance, over time, all those extra dollars will add up. So, the best would be to research and choose the best options from the beginning. Have a look at the online banks that offer competitive rates without fees.
2. Stay organized
You can use budgeting apps to stay organized. Considering the digital world we live in, it shouldn’t be hard for you to find a program that suits your style. Some of the most popular options are YNAB, Mint, or Goodbudget. These apps are known for being excellent at allowing you to track multiple savings goals at once.
Some apps can even allow you to track your progress. So, you don’t need any spreadsheets or difficult-to-use tools. Just download one of these apps and your savings will be kept under control.
3. Always prioritize emergency savings
We all want to save for vacations, but let’s admit that nothing provides more comfort than having a solid emergency fund. Before you focus on other personal goals, pay attention to how much money you save for future emergencies. Most financial experts suggest building up three to six months’ worth of essential living expenses.
An emergency savings account will act like your safety net when you encounter challenges, such as medical bills, car repairs, retirement, or even temporary job loss.
4. Be specific with the account names
Be as creative as you possibly can with the names of your accounts. Do you want to save and remodel your kitchen? Then, your sub-savings account should be named ”dream kitchen”. Trust me and never underestimate the power of naming things. It creates a stronger emotional connection, and the specific names will also help you stay focused, reminding you why you’re saving. You will no longer be tempted to spend your money on something else when you see how your dreams are slowly but surely
5. Make adjustments
As we all know, life isn’t static. If anything changes, don’t forget to make adjustments to your savings. For example, if you’ve got a raise, allocate more money to your goals. In case you’re going through a hard time, scale back temporarily. Don’t forget that the beauty of the sub-savings method is flexibility.
The best would be to make it a habit to review your savings allocations every few months, or whenever your financial situation changes.
Advantages of the Sub-Savings Method
- Clearer financial vision
Probably one of the biggest strengths of the sub-savings method is the ability to see your goals. Not having specific categories for your savings will make it easier to break up the bank and impulse spending.
- Emotional connection
When you name each savings account after something meaningful, you wish to achieve it will be significantly easier for you to stick to the plan. The emotional connection with your goal becomes a form of self-control.
- Flexibility
The sub-savings budgeting method is one of the most flexible financial strategies. It offers you the possibility to reallocate your money when your priorities shift. If there is any emergency that arises, you can easily borrow from a less urgent sub-saving, like a holiday fund.
Disadvantages of the Sub-Savings Method
- Time-consuming
Some users feel overwhelmed by the constant need to manage their multiple savings accounts. Staying organized is not as easy as it seems, and this method could feel like more work than it’s worth.
- Minimum balance requirements
Before deciding to try this method, you should know that some banks charge maintenance fees or even require a minimum balance for each account. Unfortunately, with multiple sub-savings, those fees can add up quickly. Make sure to use a fee-free or high-yield platform if you want to avoid any extra costs.
- Requires ongoing effort
This method needs regular updates, reviews, and reallocations based on your income, expenses, and changing goals. For busy individuals, it might not be sustainable long-term without automation or discipline.
The Bottom Line
The Sub-Savings Budgeting Method is more than just a trendy hack. It’s extremely practical, it helps you stay engaged and follow your dreams while still being able to survive from paycheck to paycheck. Knowing exactly the amount you can spend without any form of guilt allows you to focus on your goals.
The method is non-restrictive, and that’s what makes most people love it so much. Who wouldn’t want to save for multiple goals at the same time without feeling overwhelmed?
So, what do you think about it? Would you give it a try? Let us know in the comment section found below.
Before leaving, here is a great book: The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.
It can be easily found on Amazon. The award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you to make better sense of one of life’s most important topics.
If you liked the article but aren’t sure if this budgeting method works well, read on: Is the 80/20 Budget the Key to Financial Freedom?
