I received the following question from a reader today, and I’d like to follow in Darren Rowse’s footsteps from Problogger and open up the question to readers and other bloggers to answer, especially because I don’t think there’s only one “right” answer:
I like to setup my finances on a “purpose” basis. I create a separate account for each specific saving target. I have 401ks or IRAs devoted to long-term savings. A checking account (and a small savings account at the same bank) to handle day-to-day expenses. Some CDs as a safety net in case I lose my job. A separate savings account for spur-of-the-moment spending.
This keeps things tidy and reduces the tempation for my spur-of-the-moment spending to hamper something important (like next weeks groceries).
This works great for short-term or long-term savings. But not so well for mid-term savings. Things that are maybe 3-7 years out. (Like buying a new car or saving for home remodelling.) I can’t figure out what the best vehicle is for carrying this out. I can take more risk (and want better return) than savings accounts and CDs, but it’s not so long that I want too much stock exposure.
It just doesn’t seem like there’s a good way to create a single account to handle this sort of time-horizon.
Maybe the answer is on your site somwhere and I haven’t been able to find it. Any suggestions?
Here’s how the group writing project will work. If you’re interested in participating, just do the following:
- Write a post on your own site that addresses the reader’s question below
- Send me the link (URL of the post) and the title of the post
- I’ll create a separate post showing the original question and an up-to-date list below the question that links to all other bloggers’ responses.
- Let’s set the cutoff for posts at Friday, July 7th at midnight (Pacific Coast Time), so that I can send a quick summary at the end of the week.
This is a great way for newcomers to build links and grow some traffic (just keep in mind that my site’s averaging a little less than 100 visitors a day, though it’s growing). I benefited quite a bit from Darren’s group writing projects, so I’m trying to pay it forward, though in a (necessarily) smaller way!
Sound good? This is my first time attempting this, so let me know any feedback you have!