Several Funds, One Account: How To Manage Them

Over the past several months, I’ve suggested that people break up their savings into several smaller funds for various purposes: a home maintenance fund, an emergency fund, an automobile fund, and so on. Some readers have asked whether or not I use several accounts to manage this cash – the truth is that I use just one savings account to manage all of my funds.

Why? The biggest reasons for doing it this way all revolve around privacy. With only one account to manage, there’s less threat from identity theft and fewer passwords to remember (and potentially spill the beans about).

How do you do it? Each week, I make a standard deposit into the account, a percentage of which is intended for each of several different funds (two auto funds, a home improvement fund, an emergency fund, and a splurge fund).

In Excel, I have a six-tabbed spreadsheet that keeps track of these funds separately. There’s one “master” tab that keeps a running total of the account, and five separate tabs, one for each fund. I make sure that the summed total of all five funds match the balance in the account. Then, when I make a withdrawal from any of the funds, I just mark it on the balance sheet for that fund – the total for that fund is lowered and then the sum of all five fund balances again matches the total in the account.

What about interest? Each month, interest is deposited into the account. I usually “give” that interest to whichever fund can use it the most. Lately, it’s been going primarily into one of the auto funds.

An example Let’s say each week I want to contribute $200 to be split up evenly among five funds.

Weekly deposit I set up an automatic deposit into my savings account of $200 each week. In Excel, I mark that as a contribution of $40 to each fund every week. So, after four weeks, each of the funds has $160 in it, and the total account has $800 in it.

Monthly interest At the end of the month, the account earns $1.23 in interest. I decide to include that in fund #1. So, I go into Excel and add $1.23 to fund #1, leaving it with a balance of $161.23 and the other funds with $160. The total account balance is $801.23, which is the sum total of $161.23 plus four separate amounts of $160 each.

Withdrawals I then decide to take $50 out of fund #2 to buy a new Wii game. That brings the account balance down to $751.23, with fund #1 having a balance of $161.23, fund #2 with a balance of $110, and funds #3-#5 having a balance of $160.

Isn’t this confusing? Not really. If you’re diligent in keeping track of things with Excel, it’s actually very easy – and also rather fluid, because you can effortlessly “borrow” money from one fund for another fund if you need to. I find it very, very convenient, actually.