A Case for Opening 'What If?' Savings Accounts

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Over the years, I’ve learned of countless gimmicks and hacks for saving more money.

There’s the “nickname your savings account” strategy to remind you why you’re saving — since most banks let you change from the generic “Savings Account 3948391” to something like “Japan Trip Summer 2022.” There’s the “keep savings at a different bank” approach so you’re not tempted to keep skimming off little bits. There’s even a 52-week money challenge, where you put away $1 to start and continue to increase your savings each week by $1; at the end of the year you’ve set aside $1,378 with minimal pain.

These methods can be helpful for building emergency funds or saving for a specific goal like a home repair or vacation.

But what do you do if your emergency fund is complete and you’re already on track for other savings and investing goals? After all, personal savings rates for Americans jumped to unprecedented levels — to nearly 35% — in 2020 as spending reduced. Assuming all that money hasn’t yet been funneled toward “revenge spending” or investing, there is another way to direct your savings and plan for potential future goals.

You could try what I like to call “what if” saving. The strategy is simple: You set money aside for the possibility of a specific life decision or event. You’re not entirely sure it will come to pass, but the existence of a “what if” savings account offers financial flexibility and choice. 

The idea came to me several years ago when my husband, a long-suffering Buffalo Bills fan, was daydreaming about what he’d do if his favorite football team ever made the playoffs or the AFC championship or, dare he hope, the Super Bowl. “I’d maybe want to go to the AFC championship in person, but then I’d want to take a trip to Buffalo and watch the Super Bowl with my dad and brother,” he said. 

I joked he should start saving now.

Depending on the location of an AFC championship game, it could run a couple thousand dollars to buy flights, game tickets and a hotel room and then travel to Buffalo to watch the actual Super Bowl. So we opened a separate savings account, nicknamed “Bills Dream Fund,” and put a nominal sum of our household budget in each month thinking it would accumulate nicely before the Bills ever made it that far.

Little did we know the Bills would make the AFC championship just a couple years later, but Covid would make it next to impossible to get tickets. Still, my husband managed to tuck away about $1,200 into the Bills Dream Fund, without disrupting our regular budget or pulling from joint financial goals such as an international vacation. Now this money is set aside for the possibility of the big game next season.

A “what if” savings account should be a relatively painless way of giving yourself more choices in the future. If you’re putting away a small sum each month (we’re talking the kind of money you’d spend on dinner or a few drinks out), it shouldn’t get in the way of other saving or investing goals. The point is to regularly contribute a little bit. You can set it up like a target and work backwards (e.g., $2,500 saved in a year means $208 a month) or not necessarily even have a specific dollar-amount goal in mind. Another option is to drop larger lump sums into these accounts after receiving tax refunds or bonuses or side gig work.

You can have multiple “what if” savings accounts. We also contribute to one for the possibility of having children. We’re undecided about expanding our family beyond our four-legged fur baby. The finances are only one source of anxiety around having kids, but contributing a modest amount monthly to a “possible baby fund” has helped alleviate at least some of that fear.

This approach gives us the flexibility to make a decision in the future — we’ll have some money on hand for pregnancy and a delivery without having to scramble to redirect funds. Of course, we can’t predict costs around unexpected medical issues, but the illusion of control can be a helpful mental tool when actually making a life-altering decision. The money saved could also be used to offset the cost of adoption should biology decide not to work in our favor. 

The catch of “what if” savings is they should really only be used for short-term goals. Anything beyond three years and you should consider a “what if” brokerage account. Even within that time period, an argument could be made for putting money in a lower-risk investment that could still offer more than any high-yield savings accounts. There are certificate of deposits that offer more than 0.5% annual percentage yield, but often require tying up your finds for 20 months to 36 months. Even a bond fund could be a compelling alternative if you’re planning for a longer time horizon on the “what if” savings but want to reduce the risk.  

The beauty of these accounts is that the funds you save can always be redirected if you change your mind or the event never comes to pass. The money can be used for an indulgence, applied to another goal or even invested. And you can sleep soundly after spending it. Even if the Bills made it to another Super Bowl and choked (again), at least we wouldn’t have raided other accounts to watch it happen. 

Maintaining a “what if” savings fund gives you more choices and possibly even time to decide what you want — two of the biggest luxuries money can afford us. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Erin Lowry is the author of “Broke Millennial,” “Broke Millennial Takes On Investing” and “Broke Millennial Talks Money: Stories, Scripts and Advice to Navigate Awkward Financial Conversations.”

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