Emily, Duke University, biomedical engineering — Targeted savings accounts

In grad school, I took the idea of saving for irregular expenses in a separate savings account to an extreme – and it had a great psychological effect! Instead of saving into a single general account, I created multiple targeted savings accounts for different purposes. The first two I created were for travel (that was in The Year of the Weddings) and entertainment (for the season tickets I wanted to buy). Another really important account early on was for my car – that covered insurance (paid every six months), my parking permit (paid once per year), repairs, registration and taxes. Over the years, the accounts had proliferated to about ten, all for different single or grouped purposes! Dividing out my savings rate like this helped me to aggressively save. In many of the accounts, I overestimated my need, so some money built up. By the end of grad school, I had built up quite a balance in the accounts, and ultimately I transferred all the money into a general account, which helped me with my unexpected transitioning-out-of-grad school expenses.