Looking for a bank account that will help motivate you to save for specific goals?
I highly recommend SmartyPig, an online savings account. What's so special about it?
SmartyPig allows you to create multiple "piggy banks," each earmarked for a specific savings goal. For example, you can have one "piggy bank" labeled "Buying a Car," one labeled "Trip to Jamaica," and one labeled "Buying a Refrigerator."
Having separate "piggy banks" helps you visualize your progress toward each particular goal. This can motivate you more than pooling all your savings into one account.
(By the way, most personal finance experts refer to the practice of setting up "piggy banks" as creating "sub-savings accounts." Multiple savings accounts are an effective budgeting tool. You can read more about this budgeting strategy here.)
How It Works
Once you set up your account (details below), you'll be asked to create savings goals. You can create as many goals as you want.
Each goal gets its own name. As you can see in the photo, for example, my goals include buying a car, buying a washing machine, traveling to Jamaica, taking a vacation, and buying a bridesmaid dress for a friend's wedding.
Each goal also gets its own deadline. As you can see in this example, I need to buy the bridesmaid dress in January, because that's when the fitting is scheduled. I need to go to Jamaica in May, because that's when my friend's wedding takes place. I plan on taking another vacation in August.
Each goal also gets its own amount. I only need $800 for the dress, but I need $2,000 for the trip to Jamaica. I want $7,000 to pay cash for my next car.
Once you input these three variables (the name of the goal, the deadline, and the amount), SmartyPig will prompt you to decide how often you want to contribute to this goal. You can set up a "funding frequency" that takes place monthly, twice-monthly, every 14 days, or none (which means you'll manually contribute rather than automating your contribution).
You can also elect what day of the month you want to contribute. For example, I contribute to my goals on the 1st of every month (although I could have easily selected the 5th of the month, or the 28th of the month, or any date I prefer.)
If family and friends might want to contribute to your goal, you can set up your account to "accept contributions" from outsiders.
Track Your Progress
When you login to your SmartyPig account, you'll see the progress you're making toward each goal. You can choose to see this in the form of a percentage or a dollar amount.
In the photograph above, as an example, you can see that I've saved only 3 percent towards my $7,000 goal of buying a car, but I've also saved 10 percent towards my $1,600 goal of taking a vacation. You can see where my budgeting priorities stand!
You can edit your goals, of course. Your funds are held in an account in your name at BBVA Compass Bank, which means your savings account is FDIC-insured.
SmartyPig also offers you the option to redeem your money in the form of discounted gift cards. For example, if you set a goal of saving $500 for holiday gifts, you can either "cash out" the goal (withdraw cash), just as you would from a normal online savings account, or you can redeem the money in the form of a gift card in which you get a small bonus amount. If you opted to take a Target gift card for $500, rather than cash, for example, you might get a $525 gift card (a 5 percent bonus).
To be frank, I wouldn't opt for a SmartyPig account for this reason alone. There are plenty of websites, such as Cardpool.com or PlasticJungle.com, that allow you to buy discounted gift cards. Shop around; you might find a better deal on those sites.
SmartyPig also offers its own in-house credit card with 1 percent cash back. Again, shop around. One percent is a decent cash back figure for a credit card, but you might (or might not) be able to qualify for a card with better rewards, depending on your credit score.
The biggest benefit of SmartyPig, in my opinion, is its core service: allowing you to create multiple "piggy banks" in which you can visually track your progress toward multiple savings goals.
Ready to Get Started?
After reading this review, are you ready to open an account? If so, here's what you need to know:
Set up is simple -- just apply online for an account. You'll need your name, address, and other basic identifying information. You'll also need the routing and account number of at least other bank account, which will link to your SmartyPig account.
During the setup process, you'll need to give your bank information to SmartyPig. You'll also have to wait for 3-4 business days while SmartyPig verifies your account. Once your bank account is verified, you can automatically or manually transfer money from your account to your SmartyPig.
Remember: SmartyPig is designed to be a supplement to your primary bank account, not a replacement.