Open an Additional Account to Save Money on This Awesome Vacation
Some banks allow you to open a savings account within a savings account. You give these accounts certain labels like “ Quarterly Taxes” or “ Travel to Italy in 2018” or the “Game of Thrones” tattoo, whichever particular thing you save on. If you separate it from your main account, it will be easier for you to keep track of your progress when you save.
How subaccounts work
Sub-accounts are pretty straightforward to set up. You open a separate account under the umbrella of your main savings account, give it a nickname or label, and then you can choose to keep in that account when you transfer money.
WellsFargo, CapitalOne360, and SmartyPig have options for additional accounts, but if your bank doesn’t have them, you can try using a tool like Qapital or Tip Yourself to save money for specific purposes. With Qapital, you simply link your bank accounts and then set goals in the Qapital app . You can even create automatic save rules for a specific purpose. And Tip Yourself works like your own virtual savings bank . You open an account, link it to your bank, and you can “tip yourself” on that account whenever you want.
Sub-accounts make your goal SMART
By specifying a savings goal, the name makes it specific, which is important and meets the SMART goal criteria, according to which your goal should be as follows:
- Specific
- Measurable
- Attainable
- Relevant
- Time limited
If your goal is simply to “save more money,” you are working with very vague terms. This goal does nothing for you. However, when you’re in pursuit of a goal , it’s easier to see the light at the end of the tunnel and actually stick to the goal – you know exactly what you’ll get out of it.
Feeling Power Can Help You Save More
However, it is alsoassociated with a sense of power . A 2014 article in the Journal of Consumer Research suggests that feeling empowered can make you save more.
The researchers put subjects in different situations to make them feel like they had more control, and then asked them how much they were willing to save. Science Daily explains:
In one study, some participants were made to feel strong and asked to sit in a high chair. Other participants were made to feel powerless and asked to sit on a low ottoman. All participants were asked to answer some questions, and then they were given the option to either receive cash compensation for their tuition or deposit it in the laboratory’s savings account. The results showed that people who sat on the high chair saved more money than those who sat on the low ottoman.
In short, research has shown that influential people have significantly higher savings rates. There were caveats in their research, but overall, the paper concluded, “Based on the results of five studies, this study shows that a sense of power increases savings.”
You’re probably wondering, great, what does this have to do with naming your accounts?
A vague goal like “stop spending so much” or “save more” is not only demotivating, but subtly suggests that you are doing something wrong and fighting your urge to spend. There may be some truth in this — okay, there may be a lot of truth in that — but compare a vague goal with a specific one, like “save on college” or “save on a better apartment,” and the meaning changes. Specific, meaningful goals put you in the driver’s seat because you get something from all that money saving.
And that’s true too – your money habits serve you , whether it’s paying bills or saving for something fun. However, if you formulate your habit in concrete, measurable, and meaningful terms, you are more likely to feel like you are in control, which will motivate you to reach your goal and take a great vacation.