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Understanding Savings Vaults with O1ne Mortgage

There are countless reasons to save money: preparing for emergencies, making significant purchases, funding repairs, or even planning a wedding. Savings are essential for achieving both large and small financial goals. However, managing multiple savings goals within a single account can be challenging. This is where savings vaults come into play, offering a streamlined way to earmark funds for different purposes and work toward multiple goals simultaneously.

What Is a Savings Vault?

A savings vault is a digital banking feature that helps you track various savings goals within one account. While the specifics may vary between banks, the general concept remains the same: savings vaults allow you to manage your savings more effectively. With savings vaults, you can:

• Create separate sub-accounts for each savings goal.
• Keep savings vault balances separate from your available balance, so you know exactly how much you’ve saved for each goal.
• Fund vaults individually using automatic transfers.
• Transfer money from your vault to checking when you’re ready to use it.

Not all financial institutions offer savings vaults, but where they are available, they simplify the process of working toward multiple goals. You can monitor your progress, make adjustments as needed, and know precisely when you’ve saved enough to move forward.

What Can You Use Savings Vaults for?

Savings vaults can be used to save for any long- or short-term goal, or even multiple goals at once. Here are a few examples:

• Emergency fund
• House down payment
• Car upgrade
• Home renovation or maintenance fund
• Vacation
• Holiday gifts
• Wedding
• Pet expenses

How Savings Vaults Work in Real Life

Imagine you’re maintaining your emergency savings, setting aside money for car repairs, and starting a fund to replace your refrigerator. If your emergency fund is in good shape, you might allocate $400 in monthly savings as follows:

• $100 automatic transfer to emergency savings on the first of the month.
• $100 automatic transfer to your car repair fund on the first of the month.
• $200 automatic transfer to your refrigerator fund on the 15th of the month.

At this rate, you’ll add $1,200 to your emergency savings annually. If you don’t need the full $1,200 for car repairs, you can reallocate the remaining funds toward a down payment for a new car. Once you’ve saved enough for a refrigerator, you can redirect those funds to another goal.

Alternatives to Using Savings Vaults

If you have a high-yield savings account but no access to savings vaults, consider these alternatives:

• Use a personal finance app to track individual savings goals.
• Set up a spreadsheet or paper ledger to manually track your savings goals.
• Use the envelope method for micro-savings, such as a slush fund for occasional nights out.
• Open multiple savings accounts, ensuring you meet minimum balance requirements to avoid fees.
• Consider certificates of deposit (CDs) for larger, long-term goals, keeping in mind the penalties for early withdrawal.

The Bottom Line

Knowing you have money in the bank is reassuring, but understanding how much you can spend and how much you should save makes your savings more effective. If your savings account offers savings vaults, explore this feature. And if you’re in the market for a high-yield savings account, look for one that includes savings vaults for a better savings experience.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals with confidence.

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