I know it's trendy to use multiple savings accounts to keep track of your goals, but I've figured out a better system that helps me earn more interest on my cash

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  • I know that opening a savings account for each of your goals can be motivational, but I've figured out an approach that works better for me.
  • To earn my bank's highest interest rate, I keep all of my savings in one high-yield savings accounts.
  • Then, I use a spreadsheet to keep track of how much cash in that account is earmarked for specific goals.
  • See Business Insider's picks for the best high-yield savings account »

One of the most important tools you need to keep in your arsenal if you want to achieve financial goals is motivation.

Working toward savings or investing goals usually takes a lot of time and always requires consistency and commitment to stick with the plan while avoiding distractions along the way. Staying motivated and keeping your eyes on the prize — or what it is you're doing all this work for — is one way to keep yourself on track over time.

To this end, I can see the value in savings advice that suggests you open a different savings account for each of your goals. You could have a "travel fund" account, or a savings account to stash your emergency fund, or a "house savings" account.

This makes it easier to keep track of how much you have saved for each objective in your financial life. It may also make it less tempting to dip into those funds when doing so means taking away from a specified goal. And seeing your progress can certainly provide big boosts of motivation. 

I love these little tips and hacks that make saving more interesting and can help provide you with the motivation you need to get it done — and yet, I don't follow this particular bit of savings advice myself.

A single high-yield savings account helps me maximize my money

In fact, I have just one savings account. What I may give up in easy organization, easy progress tracking, and avoiding temptation to pull from my cash stash, I easily make up for where it matters most to me:

Efficiency and maximization. 

I find it far more efficient to simply have two main bank accounts: one checking, from which bills are paid and contributions are made to investment vehicles and accounts, and one savings account.

But if I'm only going to use one account, I want to maximize its value. That's why that one savings account is a high-yield account that provides me with one of the highest interest rates available today. 

Many high-yield savings accounts offer the best interest rates only when you reach a significant balance, which is often in the range of $10,000 or even more. Because all of my cash savings lives in this one account, I'm more easily able to reach my bank's balance requirement to secure the best interest rate it has.

As someone who prefers to keep as little cash on hand as possible so I can put everything else to work through investments, maximizing the interest I'm able to earn on cash is my top priority.

How I manage separate savings goals with just one savings account

This approach suits my money management style, but it can require a little more manual work on my part to keep my finances organized.

I have just one account for savings, but I have multiple savings goals and funds, including:

  • Emergency savings
  • Travel savings
  • A tax fund (made up of money I set aside throughout the year from my earnings as a business owner and freelancer, and then pay to the IRS and state periodically through estimated payments and each April when we file taxes)
  • A house fund, used to keep cash both for home-related emergencies as well as planned projects and repairs that need to be saved up for first
  • A gift fund, used to purchase presents and birthday gifts throughout the year

I have a different amount of money earmarked for each of these purposes, but of course in my bank account it's just one single balance. So I keep a separate spreadsheet where I track what portion of the total balance should go to each of our goals or cash needs.

While the bank account might just show a single balance, the spreadsheet shows me how much is designated for emergencies, home projects, travel, and so on.

It does require a more hands-on rather than automated approach, but what can I say? I'm a money nerd and I like sitting down to track my cash flow, spending, budget, and goal progress. This approach works for me.

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