A few years ago, most people maintained just one savings account. The money they set aside for a wide variety of goals -- replacing the dishwasher, installing new gutters, taking the kids to Disney World -- all got jumbled together into the same account.
Today, that all has changed thanks to the "subaccount." A subaccount is a smaller savings account that falls under the umbrella of a main account.
Within that main account, you can label each subaccount based on your goals. For example, you might have subaccounts labeled "New Appliances," "Trip to Paris" and "Braces for the Kids." You then channel your savings into the appropriate subaccount based on your goals.
Opening a savings account that allows me to create multiple subaccounts has been one of the best money-saving moves I've ever made. Each time I log in to my online banking statement, I can see how much money I've saved for each of my goals.
You can do this, too. It will simplify the process of tracking your progress toward each goal. In an instant, you'll see that you have $200 set aside for Paris, $500 saved for a new dishwasher and $750 squirreled away for your kids' orthodontia.
Setting up a subaccount
Many online banks, including Capital One 360 (formerly ING Direct) and SmartyPig, allow people to create subaccounts. SmartyPig even features a bar graph that lets you track your progress toward each goal as both a raw number and a percentage.
A few brick-and-mortar banks, such as Wells Fargo, also give their customers the capability to open multiple savings accounts and place a "nickname" on each one.
Check with each bank to find out more about minimums and savings rates, which change frequently.
Paula Pant blogs at AffordAnything.com about building wealth and living life on your own terms. She's traveled to nearly 30 countries, owns six rental units that produce thousands in passive income, and runs her own digital marketing company. Follow Paula on Twitter @AffordAnything.