Benefits of creating sub-savings accounts for budgeting

Jul 25, 2023Building a Budget

In this post we will explore the benefits of using sub-savings accounts or “buckets” as a way to budget expenses and what that looks like when setting up your accounts.

The benefits

Get organized: Sub-savings accounts help you stay organized and allow you to divide your money into different categories or goals, like monthly bills, entertainment, long-term savings, or emergencies. This way of organizing your finances makes it easier to track your spending and avoid overspending.

Be disciplined: Distributing your money into different buckets can help you stay disciplined by setting spending limits for each account, ensuring you don't dip into funds meant for other purposes.

Saving for an emergency: Having a dedicated bucket for emergencies provides a sense of security. By allocating a portion of your income to an emergency savings account, you'll be better prepared to handle unexpected expenses.

Set it and forget it: Sub-savings accounts are great tools for setting and achieving savings goals. Creating separate “buckets” for each goal keeps your savings organized. Set up accounts at your financial institution and “hide” your accounts from view so that you’re not tempted to spend the money!

Setting up various accounts to track and budget your income are powerful tools for effective budgeting. By utilizing sub-savings accounts, you can take control of your finances, reduce stress, and work towards a brighter financial future.

How to categorize my sub-savings accounts

Let’s explore how you could categorize your sub-savings accounts to help you better manage your finances.

Emergency Fund: This bucket is essential for unexpected expenses. Start with a goal of $1000 and then work your way up to 3-6 months' worth of living expenses.

Long-Term Savings: This bucket focuses on long-term financial objectives like retirement, education, buying a house or home improvements.

Debt Repayment: If you have outstanding debts, allocate a bucket specifically for debt repayment. Prioritize high-interest debts like credit cards or loans with higher interest rates to save on interest payments.

Monthly Bills: This category includes fixed expenses like rent/mortgage, utilities, insurance, and your phone bill. Allocate a portion of your income to cover these expenses and ensure they are paid on time.

Groceries and Household: Set aside funds for groceries, cleaning supplies, toiletries, and other household essentials. These items would be considered variable items, and can change in cost from month to month, so be sure to monitor what you’re spending from this account.

Gas: With the price of fuel on the rise, be sure to factor in what you would spend on gas.

Entertainment (Fun bucket!): Allocate a portion of your income for entertainment, hobbies, dining out, movies, concerts, and other fun activities.

Vacations: Allocate a portion of your income for a vacation you’re planning for, this way you don’t rely on your credit card, and funds you may not have.

Miscellaneous: Set aside a small percentage of your income for miscellaneous expenses that may arise, such as gifts, unexpected purchases, or small indulgences. 

If you would like assistance setting up sub-savings accounts and learning how to organize your finances, set up some time to meet with a HAPO Certified Financial Coach

Want to learn more? Listen in to our latest podcast episode where author, Sebrina Wizner, discusses budgeting and saving strategies. 

Sebrina Wizner

Sebrina Wizner

Financial Education Coordinator | HAPO Community Credit Union



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Saving / Savings Account / Checking Account / Financial Coaching / Building a Budget / Planning Ahead