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How to use multiple sub-accounts to reach your financial goals

October 6, 2022

It seems so, according to reports. The European economic situation has left many of us feeling a little on edge with high fuel costs, sky-high utility bills, and high debt levels. But economic upheaval does not mean your personal bank accounts must follow suit. With careful money management and a few innovative tools, you can stay on top of your finances by budgeting with multiple accounts.

First, what is a sub-account?

Sub-accounts are a relatively new banking innovation, but the principle is centuries old. Have you ever put cash into jars for a rainy day? Maybe you had one jar for your vacation and another for an increasingly-urgent roof repair. That is a sub-account. However, instead of lining up jars of cash in your kitchen, you can manage it online via one bank account. It’s more secure and will keep your kitchen tidier! 

Set a high-level financial goal for each sub-account

Sound financial management starts with clear financial goals. Without doing this first step, you’ll often find yourself torn between saving money on home furnishing impulse buys and lusting after stunning kitchen renovation ideas on Pinterest. It’s only after you sit down and make an honest assessment about what you want to achieve with your finances that you get some clarity. If you have a partner, discussing money goals is also the best way to manage your finances as a couple. It will help prevent future money arguments and keep positive and productive financial conversations a central part of couple life. Try to have one high-level financial goal for each sub account. You might have one account for your upcoming travel plans, one for unexpected car repair bills, or perhaps one for your child's college fund. But be careful with this task. Though it’s common in financial budgeting to occasionally balance conflicting demands, don’t overtly create goals that directly conflict with each other. It’s time to return to the drawing board and reexamine your priorities if they do. Choose your most important goal and ditch that other one until later. 

Create some savings rules for your sub-accounts

With a bunq account, you can create separate PINs on your card for 2 different sub-accounts with their own IBAN. That’s helpful if you want to tie specific spending to a sub-account. For example, maybe you want to keep housing expenses in a separate sub-account from your food spending. You’ll need to decide what rules to put in place for each sub-account so that you’re spending and saving money into the correct pots. The easiest way to do this is to review your bank statement from the past three months, look at what retailers you buy from (and for what reason), and determine what rules you need to put in place. These rules will also help you set boundaries for your spending. Suppose you have a sub-account for luxury items with spending rules and a monthly target. In that case, you might think twice about using that account to order that double-shot cappuccino or signing up for more tv subscriptions.

Set monthly financial targets for each sub-account

Once you have your goals and rules, it’s time to start thinking about getting more granular with your budgeting, to help you get the most from your sub accounts. This step will help you stay on track with those big goals and hit any critical dates for your financial targets, such as a vacation or a wedding.  A monthly target is the most sensible way of doing this. However, smaller, shorter-term goals might benefit from a weekly target. This will help you to ensure your goals are realistic and achievable by the date you have set. Always start with an honest attitude about what you can spend and save from the outset rather than hope for the best. This is the foundation of any good money management strategy. Regular goals will also help you if something unexpected crops up along the way. For example, many countries recently saw a hike in fuel and utility bills. If you experienced this problem, you’ve probably noticed a gradual monthly increase in those payments. Setting monthly targets allows you to review other financial goals and see what needs replanning to ensure you still have money aside to pay for heating and transport. 

Get into the habit of checking your progress

Sub-accounts provide an at-a-glance view of your finances, helping you to see how close you are to a target goal. However, you’ll need to get into the habit of checking these accounts regularly. If things are not on track, you’ll find it easier to remedy if you spot a problem early. An excellent way to keep tabs on your money is to carry out a financial check simultaneously as you do another regular task, like writing your grocery list. That way, you’re more likely to remember it. 

Revisit your goals regularly

The exciting part about saving for a big purchase is the sense of reward when you try a few savings tips and see those numbers hit your goal. But to get the most from savings accounts, always take some time to revisit your goals, set new ones, and ditch any that you no longer need. This budgeting stage is a great way to keep you motivated, as many people struggle to stay consistent with their long-term savings. Also, use this time to reflect on your spending in your sub-accounts and see if you could do anything differently next time. For example, could you have cut costs by switching energy providers, and if so, how much?Did you overspend on luxury goods, and could you resell some old items you no longer want, to help you achieve a new saving goal? 

Create smart saving goals now

Don't leave your financial situation vulnerable to external events. Now is the perfect time to get your finances in order, whether saving for a big event or cutting back to help you pay household bills. Whatever your financial situation, sub-accounts can help you grow your savings and manage your money. Take the first small step by signing up here for a bunq mobile bank account.   

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