Managing Our Savings Account

by Kevin on February 20, 2008

I received a reader comment/question on The Savings Snowball. Instead of answering within the comments, I thought I would share it here and flesh it out a bit. Here’s the question.

But how do you separate what you’re saving for?

My bank lets me put the money into a savings plan (banking in Israel is different – we don’t have “savings accounts”, just savings plans).

What financial management system do you use to separate out what you’ve saved into various blocks?

Let me clarify how our savings work. We only have one savings account with ING Direct. All of our “saved” money goes into this account. (ING does give you the option to open up multiple mini-accounts to save for specific purposes, but we don’t use it.)

Instead I use Microsoft Excel to track what is in the account. We have a Excel Workbook for our finances, and each worksheet within it tracks one account (savings, checking, etc.). So there is a worksheet for the ING savings account. We then break down and track each category within the spreadsheet.

savings example

An example that is similar to what we use is shown to the right. The top 5 rows are what is currently in the account. The first line shows the total of the four categories below it. All of the money is in the one savings account, but we track it individually with the spreadsheet.

Below that, if we transfer money into the account, it goes towards a specific category. If we were depositing $400, it might be broken up as shown.

The grouping on the bottom is the new total… simply the first group plus the deposit group to give the new totals in each category. I then copy the numbers from the bottom row to the top row to complete the update.

That’s how we track everything. Excel is a very powerful tool if you can learn how to use it. Most of what we do is just addition and subtraction, so your average user should be able to handle it.

{ 3 comments }

DanL February 20, 2008 at 10:36 am

I have a monthly budgeting spreadsheet that I use to track & categorize all of my monthly expenses in Excel. There are fixed expenses, which I enter when I pay those, then there are budgeted items that I track on a separate page each month.

The sheet works great because I can see what items are causing me to go over budget and how much money I have left at the end of each month to pay down bills–very effective.

ezuk February 24, 2008 at 6:21 am

Thanks for the post! Quite interesting. I’ll probably try this when I finally manage to save something (as opposed to paying debt…)

Russ May 27, 2008 at 2:28 pm

I use Microsoft Money’s “Comment” field to track and report amounts put into one bank account. It’s a little bit of extra work, but keeps my accounting in one place.

In the example above, where you deposit $400 into savings, I would enter that as four separate transactions, and enter the purpose (“Roth IRA” or “trips”, for example) in the Comment field of each transaction. When reconciling my bank statement, MS Money will let me reconcile the single $400 transaction from the bank with my four separate transactions in Money.

When I want to know how much I’ve saved for “trips”, I can use Reports to search for the comment “trips”, and see the amount saved. When I withdraw the money to pay for the trip, I’ll make sure to enter the Comment “trips” on the withdrawal, so the amount saved for “trips” will come back out to zero (until I start saving for the next trip).

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