Saving by categories

I ran across this tip the other day while I was doing some research for an article for our bank and thought it was worth passing along. When saving for something specific, open a separate savings account for it and title it accordingly in your online banking; for example, "new garage fund". That way you can set a specific goal for how much you need and how long you think it will take and limit yourself to only taking that amount out when you're ready. Otherwise, if all your savings is in one big pot, it might be tempting to dip into it a little more as your costs pile up for the garage and you don't keep track of how much you actually spent on it. Also, it limits how much you take away from your general emergency savings, which should be $1000 at a minimum and ideally equal to 3 months worth of expenses.