Based on Pat’s budget in the last article, she has about $1,300 each month to do what she pleases. Pat is getting real antsy about moving out of her parent’s basement. She loves her parents, but she feels like a child staying at home and her well-intended parents are starting to get on her nerves. Pat looks up some 1 bedroom apartments near work and the cheapest option looks to be about $1,200 a month with rent and utilities. It looks like she would have possibly just enough, but Pat is smart and she knows she is cutting it too close. Besides, Pat hasn’t even opened up a savings account yet, which she knows is the next best step on her financial journey. So Pat stays PATIENT, focuses on opening up a high interest savings account, and thinks about ways to increase her income so she can soon get a place of her own.
What is this high interest savings account? Well it is an amazing tool Pat learned about at goodanuff.com. She has her Checkings account where all of her grocery store payments flow into every other week, however she has no dedicated Savings account that also earns her a bit of interest while her money is parked there. So Pat looks up some of the best high interest Savings accounts available and she sees several online banks like CitiBank, CapitalOne, and many others. She notices many are similar and she looks up some reviews and background on the company and chooses the one she likes.
Pat already has $4,000 in her Checkings account, so she keeps a little over 1 month-worth of expenses in the Checkings account and sends the rest to her new, high-interest savings account. With this sexy new Savings account, Pat gets some ideas. She knows she should have about 3-6 months in emergency savings, so for a couple of months Pat puts $1,000 per month into her new Savings account and she now has about $5,000 in there. She does not want to be tempted to spend this money so she opens another high interest savings account with a different bank so her emergency fund is out of site and out of mind. Are you confused yet?
Here’s a table:
| Checkings Account (Pat’s bank at the grocery store) | High-interest Savings Account (Bank 1 – CapitalOne for example) | High-interest Emergency Savings Account (Bank 2 – Citibank for example) |
| 1 month of expenses sitting here. | Used for short-term spending and goals (1-5 years). | This is the emergency fund, for EMERGENCIES: Things you could have never possibly planned. It is equal to 3-6 months worth of expenses. DON’T LOOK, DON’T TOUCH! |
Dayummm, Pat! You just went crazy with your finances. Pat now has 3 bank accounts and she is makin’ moves. Pat did a lot, so she takes a breather and has dinner with her parents upstairs. She definitely enjoys the free, home-cooked meals and her mom makes a mean casserole.
Good post!
Thank you!